This quite the luxury news from LVMH and Hermès. Hermes International said LVMH Moet Hennessy Louis Vuitton SA has acquired a 17 percent in the company and said its family shareholders have confirmed that they are not contemplating any “significant” selling of shares. The Hermes family shareholders have a “strong majority control” of nearly three-quarters of the shares and are “fully united around a common business vision,” it said in an e-mailed statement. Investors can become minority shareholders in Hermes and the company will always treat its shareholders with “utmost respect,” Hermes said. Here’s the Wall Street Journal with the report:
LVMH Moët Hennessy Louis Vuitton is taking a large stake in its rival, Hermès International, a bold move that could rekindle consolidation in the luxury-goods industry. LVMH, the world’s biggest luxury-goods group with brands such as Louis Vuitton and Moët et Chandon, said Saturday it had accumulated as much as 17% of the family-controlled French fashion house behind the iconic Birkin and Kelly handbags. LVMH acquired a 14% stake, and said it owned derivatives that it can convert into an additional 3% stake. The cost of its full stake is €1.45 billion ($2.02 billion), according to the company. The stake-building immediately raised questions about the long-term intentions of LVMH, whose chairman Bernard Arnault has often lauded Hermès and has over the past two years signaled interest in acquisitions. LVMH is known for its takeover hunger, having in the past made moves on big competitors such as Italian fashion house Gucci, as well as smaller players such as Fendi and Donna Karan. In its statement, the company described its move as friendly. LVMH said it wouldn’t launch a takeover offer, try to control Hermès or ask for a board seat. “The objective of LVMH is to be a long-term shareholder of Hermès and to contribute to the preservation of the family and French attributes which are at the heart of the global success of this iconic brand,” the company said. LVMH added that it supported Hermès’ strategy and management. The company declined to comment further. Hermès wasn’t immediately available for comment. Still, the stake could be a way for LVMH to get its foot in Hermès’ door in view of an eventual takeover, analysts said. “This indeed seems a way for LVMH to be in pole position for a future Hermès acquisition,” said Sanford Bernstein luxury-goods analyst Luca Solca. “LVMH is very much in ‘mass luxury’ and Hermès could complement that with a higher-end focus.” Various descendants of the Hermès family control 72% of the company; the rest is floated on the Paris stock exchange, where its share price reached record highs in recent weeks on speculation that the company could be taken over or that part of the family could sell its stake. Hermès’ market capitalization is €18.6 billion. LVMH was able to accumulate its stake at a cost of about half the market price for Hermès shares by using derivatives, according to a person familiar with the matter. – from WSJ
Alex has written for Vanity Fair, Barrons, Bloomberg and Condé Nast Traveler.