Hermès and LVMH dispute end in sight

After nearly two years, the dispute between Hermès and LVMH seems to be nearing its end. Hermès, one of the last great independent luxury houses in France, saw almost 20 percent of its shares get sold to LVMH owner Bernard Arnault.

Authorities

must determine if was illegal activity

French authorities must determine if Arnault acted legally, and Mr Arnault has vehemently denied he secured the shares with conniving purposes.

According to the New York Times, French securities regulators will propose their case after a two-year inquiry. Under French law, the regulators cannot force him to disgorge his Hermès holdings, although he could face a maximum fine of 10 million euros. But, as France's richest man - Mr. Arnault is worth 29 billion dollars - that would seem small change for a part ownership of the prestigious house.

The Financial Markets Authority is expected to argue that LVMH carefully planned and executed the accumulation of Hermès shares more than a decade ago in a manner that disguised Mr. Arnault’s involvement until Oct. 23, 2010.

That is the day he shocked Hermès and the financial world with the announcement that he owned a 14.2 percent stake and was taking it to 17.1 percent. (He has since raised it to 22.3 percent, according to NY Times).

When Mr Arnault bought Hermès' shares, they were sold for 85 euros. Now there are worth 277 euros, thus securing his investment at over 2 billion euros. The fine, it seems, is irrelevant.

Image: Hermès