PARIS - Li & Fung Group's Trinity has bought Cerruti for 53 million euros ($70 million) from the US fund that salvaged the Italian fashion house best-known for its woollen men's suits and 1881 perfume.
Hong-Kong based Trinity, the Chinese group's menswear retail arm and a long-time Cerruti licensee, is moving up the value chain by becoming the full owner of the brand.
Cerruti makes a significant proportion of its sales on the Chinese mainland, the world's fastest-growing luxury market.
It is being sold by US fund MatlinPatterson, a specialist in distressed assets, which bought it out of administration in 2006.
"The Cerruti brand is coming out of its convalescence period by integrating a large group such as Li & Fung with a world presence and significant means," Cerruti Chief Executive Florent Perrichon, said on Wednesday.
Trinity's acquisition of Cerruti, which rivals Hugo Boss and Armani, highlights Chinese retailers' growing appetite for European luxury brands, particularly those that have a rich heritage and suffered during the financial crisis.
Li & Fung, a consumer goods exporter that is a top Wal-Mart supplier, has gone on a shopping spree in recent months, with deals including the purchase of Oxford Apparel, which makes menswear and distributes through retailers in the United States.
The Chinese group also recently bought the British private-label apparel supplier Visage.
Other Chinese groups are on the lookout for investments in European luxury brands. YGM Trading, which bought the French design house Guy Laroche in 2004 and is the Asian licensee for British brand Aquascutum, is hunting for deals.
So is Fosun International, which took a stake in the French upmarket resort operator Club Med in June.
Loss-making Cerruti, which has made big investments in advertising and hired French singer Marc Lavoine as its face, is hoping to break even next year.
For 2010, it expects an operating loss of around 4 million euros ($5.20 million) on revenue of 150 million, against a similar operating loss in 2009 on turnover of 137 million.
Perrichon, a former Mot Hennessy Louis Vuitton S.A. executive who has led Cerruti since 2008, said Li & Fung had asked him to stay on and the deal is expected to close in March.
Cerruti operates in France, Switzerland and Japan through various licensing and distribution arrangements and boasts a refurbished flagship store in Paris, which reopened this year.
Its business model is similar to Balmain, which collapsed in the mid-2000s and is growing mainly through licences.
Cerruti recently relaunched its womenswear operations and presented its first collection - designed by Britain's Richard Nicoll - at the Paris fashion week in March.
The brand's founder, Nino Cerruti, is no longer involved with the company but has kept the family's textile plant in Italy, which still supplies Cerruti.
Cerruti makes its men's couture lines in Italy and women's luxury lines in Belgium, but it outsources the production of its second lines, accessories and perfumes to licensed partners.