Kering, the majority shareholder in PUMA, plans to redistribute 70% of the 86.3% shares it has in the sports brand to shareholders, which will leave Kering with about 16% stake. It will also make Artémis SA, which has a majority share in Kering, the new main shareholder in PUMA. Both Kering and Artémis SA are owned by the ultra-rich French Pinault family. In 2016, PUMA accounted for about 30% of Kering’s sales.

“The contemplated distribution of PUMA shares to our shareholders would be a significant milestone in the history of the Group. Kering would dedicate itself entirely to the development of its Luxury Houses, whose enduring appeal, built on creative audacity and innovativeness, will allow us to continue to gain market share and create value,” explains François-Henri Pinault, Chairman and CEO of Kering, in a press release. The Luxury division consists of brands like Gucci, Bottega Veneta, Saint Laurent, Alexander McQueen, Balenciaga, and Stella McCartney.

“This operation would enable our shareholders to directly benefit from PUMA’s future value creation,” Pinault continues. “We are proud to have supported the turnaround of PUMA, which now has unrivalled capabilities to take full advantage of the specific dynamics of its global markets and is poised to achieve substantial growth, led by its talented and passionate management team.”

Kering created a Sport and Lifestyle division when it acquired majority shares in PUMA in 2007, where the brands Cobra PUMA Golf and Volcom are also housed. Volcom will be sold “when the time is right” and when a positive solution presents itself for both Kering and the brand, says CFO Jean-Marc Duplaix.

The transaction will also increase PUMA’s share free float from 14% to around 55%. “PUMA would become much more attractive for investors as our shares would have a substantially higher free float and larger trading volumes,” says Bjørn Gulden, CEO of PUMA. “Kering and Artémis, however, would remain strong partners and shareholders, which proves that they believe in our strategy and PUMA’s future success.”

News about the proposed transaction, however led to PUMA shares falling by 16% – the worst since September 2001. Some investors had hoped that Kering would look for a buyer that would pay a premium for the shares, and there are also concerns that shareholders who receive shares will sell, which will pressure the stock in the short term.

The transaction will be proposed to shareholders at the AGM on 26 April, and Luca Solca, an analyst at Exane BNP Paribas, estimates that the ratio will be one PUMA share to 12 of Kering’s.