Thu, Dec 23, 2010 - Page 10 News List

LVMH’s stake in Hermes exceeds 20%

‘FULLY UNITED’:The three branches of the family that founded Hermes have said that they are standing together to maintain control of the 173-year-old French company

Bloomberg

LVMH Moet Hennessy Louis Vuitton SA, the world’s largest luxury-goods maker, raised its stake in Hermes International SCA to more than 20 percent, two weeks after Hermes family shareholders vowed to strengthen their takeover defense.

LVMH has crossed the threshold of 20 percent of Hermes and holds 21.3 million shares, Paris-based LVMH said in an e-mailed statement late on Tuesday. That’s up from the 17.1 percent it announced in October. LVMH bought the shares on the market, said Olivier Labesse, a company spokesman.

The increased stake may boost speculation that LVMH chairman Bernard Arnault is gradually targeting a takeover of Hermes, even as the company said again it isn’t seeking a board seat or control. Descendants of the Hermes founding family said on Dec. 6 they are setting up a new holding company to allow family members to sell without making their shares available to LVMH.

Hermes, the French maker of Kelly handbags that retail for about 7,000 euros (US$9,375), has said that the three branches of its founding family are “fully united” in their desire to retain control of the 173-year-old company.

Hermes hired BNP Paribas SA and Bank of America Corp as advisers last month to help fend off a possible LVMH takeover bid. LVMH can’t make an offer for all of Hermes until at least April 23, according to French regulations.

LVMH bought the 17.1 percent stake via equity swaps. The French securities regulator is investigating whether that transaction complied with its rules. The increased stake will further reduce the percentage of Hermes stock that is publicly traded, already less than 10 percent. Hermes’s family shareholders own more than 70 percent of the company.

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