(Bloomberg) -- A take-private deal for Tod’s SpA spurred chatter of consolidation among smaller luxury firms operating in a market dominated by a handful of heavyweights.

The maker of posh loafers soared as much as 18% in Milan Monday on news that its founding Della Valle family is teaming up with LVMH-backed buyout firm L Catterton on a bid. The development reverberated across the sector, sparking gains in shares of local Italian rivals Salvatore Ferragamo SpA and Brunello Cucinelli SpA, along with the UK’s Burberry Group Plc.

Read more: Tod’s Founding Family Partners With L Catterton for Buyout 

The Tod’s plan is “likely to fuel M&A speculation,” Citigroup Inc. analysts Thomas Chauvet and Lorenzo Bracco said in a note. 

“This announcement is a reminder of the challenges faced by small luxury brands and groups in an ever-competitive industry dominated by large multi-brand conglomerates,” they wrote. 

Europe’s luxury companies have experienced mixed fortunes this earnings season as analysts predict a continued drop in sales in the face of a faltering economy and subdued Chinese tourism. Shares of giants LVMH and Hermes International SCA rallied following better-than-expected numbers while Burberry slumped after downgrading its outlook.

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