Hermès forms family holding company

Hermès is pulling out all stops to prevent LVMH from taking over the family-owned company. Family shareholders are to set up a holding group with more than 50 per cent of the capital of the luxury goods company. The move is aimed

at countering the stakebuilding by billionaire Bernard Arnault, the group’s unwanted shareholder, reports the Financial Times.

The announcement on Sunday night followed a meeting of 40-50 Hermès family members on Friday to discuss whether they could sell shares into the market without them being acquired by Mr Arnault, chairman and chief executive of LVMH, maker of Louis Vuitton bags, and the world’s largest luxury goods company by sales.

“The family decided to confirm its unity for the long-term by creating a family holding company,” according to the statement issued on Sunday night. “This new firm will benefit from preferred rights on the remaining stock owned directly by the family.”

Some 73 family descendants of Thierry Hermès, a harness-maker who founded the company 173 years ago, will cede part of their dividend to the new holding company which will have first right of refusal on members wishing to sell shares.

The family holds 73.4 per cent of the Paris-based company, famed for its silk scarves and Kelly and Birkin handbags, which it controls through a limited partnership structure, making it virtually impossible to take over even its stake were to reduce to a tiny minority.

However, Hermès International, acknowledged within the industry as being its apotheosis in terms of quality and craftsmanship, has been shaken by the sudden arrival of Mr Arnault, who announced six weeks ago that he held 17.1 per cent of Hermès International – two-thirds of the free float.

LVMH acquired the shares through a series of cash equity swaps, the use of which is being investigated by the AMF, the stock market regulator. LVMH maintains it “scrupulously respected the rules”.

It says its entry into Hermès is friendly, but Bertrand Puech, chairman and Hermès family member and Patrick Thomas, chief executive, have called on Mr Arnault to withdraw, citing differences in culture and the manner of his stakebuilding as “an attack”.

In its statement, Hermès said the new family holding company would have no effect on the family’s stake in Hermès nor the manner in which the company is governed.

Image: Hermes AW10 / SS11
Source: FT©