The group, which is expected to be up and running by the end of this year, already has a list of possible targets for future acquisitions to be funded with the support of its top investors.

"With strong financial backing from Carlyle and Investindustrial, the group will pursue further acquisitions in adjacent niches," the Italian and U.S.-based firms said on Wednesday in a joint statement.

The new group aims to expand in the United States and in Asia in particular, one source with knowledge of the deal told Reuters.

The idea is to create a common umbrella for design products to allow the single brands to develop independently but under the same leadership, the source said, citing as an example French luxury group LVMH.

The source added the two main investors could consider an initial public offering for Design Holding in the medium term as a way to exit their investment.

The three companies involved in the operation, which are currently owned by Investindustrial, can boast iconic products including B&B Italia's armchair "Up" designed by artist Gaetano Pesce and PH artichoke lamp produced by Denmark's Louis Poulsen.

All three companies will be transferred to the new group in which investment groups controlled by Carlyle and Investindustrial will own equal stakes.

JPMorgan and Lazard were financial advisors in the deal, with legal firms Latham Watkins and Chiomenti advising Carlyle Group and Investindustrial respectively.

Piero Gandini, the founder of Flos, and the Busnelli family, which created B&B Italia, will both have minority stakes in the new venture.

Gandini, current Flos CEO, will become the new group's chairman, and Giorgio Busnelli, B&B Italia chairman, will be appointed vice chairman.

(Reporting by Francesca Landini and Elisa Anzolin; editing by David Evans)