PARIS, Mar 19, 1999 / FW/ -- History was made today. Luxury goods manufacturer and retailer had signed an agreement with Pinault-Printemps-Redoute, Europe's leading company for specialized distribution.

This transaction creates a new force in the luxury goods sector with significant resources to grow through acquisition. It represents a unique alliance between Pinault-Printemps-Redoute, Europe's most dynamic specialized distributor, and Gucci, one of the world's most profitable luxury goods companies.

Gucci will be ideally positioned to take advantage of the consolidation in the global luxury goods sector, through this substantial capital injection, and by its ability to leverage Pinault-Printemps-Redoute's proven expertise in value enhancing growth.

The two companies believe they are ideally suited to build a leading luxury goods group. Gucci provides a substantial platform for future growth and has the management capability to replicate with other brands the success it has achieved with its own brand.

Pinault-Printemps-Redoute and Gucci share a vision for the future of the luxury goods sector. They recognise the need for an appropriate balance between creative skills, marketing, and financial management. They share a common commitment to operational excellence, earnings growth, and superior shareholder returns.

Under the terms of the agreement Gucci is issuing 39,007,133 shares equal to 40 per cent of Gucci's outstanding capital, not including the shares issued to the Employee Trust.

The stock is being issued at a price of $75 per share, representing a premium of 13% over the average of the last 10 trading days' closing price of Gucci's shares on the New York Stock Exchange.

The transaction is expected to be neutral for Gucci's earnings per share for as long as Gucci holds the cash. It is expected to be accretive to Gucci earnings after acquisitions, and immediately accretive to Pinault-Printemps-Redoute's earnings.

The key elements of the transaction are: