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Prada and Della Valle have designs on Church

AN ITALIAN "battle of the bella for leather" is in prospect at Church & Co as two leading Milan fashion companies prepare to go toe to toe for control of the British shoemaker to the well-heeled.

Shares in Church, whose products retail at pounds 175 a pair on average, jumped to record levels yesterday after the company said it had held talks with a possible bidder.

It is thought the most likely contenders are the Milan-based shoes and bags group Della Valle, whose brands include JP Tods Loafers, Fay jackets and Hogan shoes, and Prada, the Italian designer house.

Both are private companies and have built up minority stakes in Church. Prada acquired an 8.51 per cent stake in the UK company last month and Della Valle yesterday increased its holding from 6.3 to 7.76 per cent. The talks could lead to a full takeover or a strategic stake in the group, Church said.

Earlier this week, Patrizio Bertelli, Prada's co-founder, admitted his company was interested in Church. He said the Italian group could help "reposition the English product without changing its nature".

Analysts say Church would be an unusual acquisition for Prada as the UK company's traditional leather goods are a departure in style from the Italian designer's haute couture range. One suggested Prada could have taken a speculative stake in the company, betting that someone else would bid. He said Della Valle's brands would provide a more obvious fit with Church's, but did not rule out the possibility that Prada was looking to diversify its product range.

Church's market value before yesterday's announcement was pounds 80m. Analysts say a likely offer price would be pounds 10 a share, valuing the company at pounds 110m, but could increase to pounds 12 a share if a bid war developed. The shares closed up 90p at 880p yesterday.

Church's, which owns Jones, the mid-market retail chain, and Cheaney, the medium to high-grade gentleman's footwear range, said yesterday its pre-tax profit for the half year to 30 June fell by a third from pounds 1.5m to pounds 1m on turnover of pounds 36.8m, down from pounds 38.2m.