LVMH acquires Hermes stake

Hermes, arguably the world's most desirable luxury brand, has sold a stake to the Louis Vuitton group. LVMH, which is in turn world’s largest luxury goods company by sales, acquired 17.1 per cent of Hermès International, best known for its

Birkin and Kelly bags. LVMH, which owns the Louis Vuitton, Marc Jacobs and Donna Karan brands, has bought 15m Hermès shares equivalent to a 14.2 per cent stake. It also holds derivatives, which when converted will give it an additional 2.9 per cent, wrote the Financial tTimes.

Industry experts praised the move, in which LVMH paid less than half the market price for the shares due to the use of derivatives, cementing its reputation as the world’s leading luxury goods group. The €1.45bn (£1.3bn) cost of the 17.1 per cent stake equates to €80.50 a share, whereas Hermès shares closed at €176.20 on Friday.

Bernard Arnault, France’s richest man and LVMH chairman and chief executive, has long cast a covetous eye on Hermès, seen as the ultimate bid target, a status reflected in its valuation as the most expensive in the luxury goods sector.

Amid expectations LVMH, which has a history of aggressive acquisition-making, wanted a majority stake in Hermès, the company insisted it had “no intention of launching a tender offer or taking control” of Hermès.

Mr Arnault will not demand a seat on the board of the Dumas family-controlled company, and LVMH said its aim was to be a long-term shareholder of Hermès.

However, the size and rapidity with which LVMH has acquired its stake raises questions over the cohesion of the Dumas family, some 40-50 members of which control 72 per cent of the shares.

In a statement, Hermès said the family had strong majority control, adding it would treat its shareholders with “utmost respect”.

Industry sources said the most likely seller of the shares were a group of family members who are understood to have been looking to exit.

Image: Kelly bag
Source: Financial Times