*

Will instructs heirs to sell 15% stake within 18 months,

then up

to 54.9%

*

Priority buyers include LVMH, L'Oreal, EssilorLuxottica

*

Foundation and partner hold 70% voting rights

*

Heirs should consider IPO as alternative to sale of second

tranche of shares

*

EssilorLuxottica says would assess possible Armani deal

(adds comment from EssilorLuxottica, more details from will,

details on foundation, analyst comment)

By Elisa Anzolin

MILAN, Sept 12 (Reuters) - Late designer Giorgio Armani

has instructed heirs to gradually sell the fashion brand he

created 50 years ago or seek a stock market listing, his will

said, marking a surprising turn for a company highly protective

of its independence and Italian roots.

The will, reviewed by Reuters, states heirs should sell an

initial 15% stake in the Italian fashion house within 18 months

and later transfer an additional 30% to 54.9% stake to the same

buyer between three and five years after Armani's death.

The designer, known in the industry as "King Giorgio", died

on September 4, at 91 and with no children to inherit his

fashion empire.

The will also says that priority should be given to luxury

giant LVMH, beauty heavyweight L'Oreal,

eyewear leader EssilorLuxottica or another group of

"equal standing" identified by a foundation the designer set up

to preserve his legacy with the agreement of Armani's business

and life partner Pantaleo Dell'Orco.

As an alternative to the sale of the second tranche of

shares, an initial public offering should be pursued, in Italy

or in a market of equal standing, it said.

It was not immediately clear what would happen if one of the

heirs or the foundation did not fulfill the instructions on a

sale set out in the will.

The explicit mention of stake sales and of France-listed

players as potential buyers comes as a surprise, given Giorgio

Armani's persistent refusal to dilute his control or list his

fashion group on the stock market. It could also spur a race to

secure a slice of the brand, which industry experts say has

retained its appeal despite a global luxury slowdown.

EssilorLuxottica, controlled by the heirs of Italian

entrepreneur Leonardo Del Vecchio and with commercial ties to

Armani, said in a statement it would consider a possible deal.

"We're proud of the consideration our group and its

management received from Mr Armani," a spokesperson for

EssilorLuxottica told Reuters.

"Together with the board we'll carefully assess such a

development prospect given the deep ties already existing

between the two groups."

ARMANI'S WILL PROJECTS FASHION GROUP INTO A NEW ERA

Over the years, the maker of popular unstructured suits that

gained him international fame received several approaches,

including one in 2021 from John Elkann, scion of Italy's Agnelli

family, and another from luxury brand Gucci, when Maurizio Gucci

was still at the helm.

Armani was the sole major shareholder of the company he set

up with his late partner Sergio Galeotti in the 1970s and over

which he maintained a tight rein - both creative and managerial

- until the very end.

He has left behind no children to inherit the business,

which generated relatively stable revenue - 2.3 billion euros

($2.7 billion) in 2024 - but whose profits have shrunk amid a

broad luxury industry recession.

The will, which lists six different types of shares with

different voting rights, gives the Fondazione Giorgio Armani and

life partner and right-hand man Pantaleo Dell'Orco 30% and 40%

of the company voting rights, respectively, meaning they would

together control the fashion group with 70% of voting rights

combined.

The foundation will retain a 30.1% stake in a listing,

according to the will.

Its five-member board will be chaired by Dell'Orco, in

accordance with the foundation's bylaws. Other board members

include Rothschild partner Irving Bellotti, Armani's nephew

Andrea Camerana and two family outsiders, a person close to the

matter told Reuters.

Heirs should consider other fashion and luxury companies

with which the Armani group has commercial ties for a future

sale, the will also said.

The Armani group has commercial partnerships with both

L'Oreal and EssilorLuxottica.

Yet, with a market value of 240 billion euros and a

reputation for being a patient and supporting minority investor,

conglomerate LVMH controlled by billionaire Bernard Arnault may

ultimately prevail.

"We think that LVMH would likely be the most interested, of

the three, in a stake, were it to become available, given the

strategic fit," analysts at Berenberg said in a note. They said

the group could easily afford to buy Armani, which they valued

at between 5 and 7 billion euros.

(Writing by Lisa Jucca, editing by Giulia Segreti and Tomasz

Janowski)