LVMH, the world’s leading luxury retailer, said on Saturday it had taken a 14.2 percent stake in Hermes, but denied it wanted to take over the French luxury goods firm.
The company controlled by French businessman Bernard Arnault said it wanted to boost the stake to 17.1 percent at a total cost of 1.45 billion euros (US$2 billion) but was not seeking even representation on the Hermes board.
The move makes LVMH the largest Hermes shareholder after the heirs to the family share of around 70 percent.
There has been speculation about the future of Hermes, known for its fine leather goods and silk scarves, since the death in May of its charismatic head Jean-Louis Dumas.
In a statement, LVMH said it holds 15,016,000 shares of Hermes International, with the objective “to be a long-term shareholder of Hermes 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.”
It added that “LVMH fully supports the strategy implemented by the founding family and the management team, who have made the brand one of the jewels of the luxury industry. LVMH has no intention of launching a tender offer, taking control of Hermes nor seeking Board representation.”
The statement said LVMH also holds derivative instruments over 3,001,246 Hermes shares and intends to request their conversion.
“LVMH would then hold a total of 18,017,246 Hermes International shares, or 17.1 percent of its capital. The total cost of this shareholding would, in this case, be 1.45 billion euros,” the statement said.
Previously LVMH owned less than 5 percent of Hermes shares, the threshold beyond which shareholders must declare themselves.
About 20 percent of Hermes’ capital was floated in 1993. The rest was until now controlled by the family, about 40 people, and the company’s management.
A few weeks ago, the head of Hermes’ supervisory board Jerome Guerrand sold 24,257 shares for 4.14 million euros, or about 0.02 percent of the company’s capital. It was not known who else sold shares to Arnault and LVMH.
Arnault reportedly paid 80 -euros a share for LVMH’s slice, while Hermes shares were at 176 euros at close on Friday.
“It’s a magnificent brand, with incredible savoir-faire, we’d rather LVMH invest in it than someone else,” a source close to the deal said.
“It’s a very well-managed company, which got through the crisis without problems, there’s no reason to change anything in its strategy,” a luxury goods sector analyst said.
The analyst said that Arnault wanted to “shelter this family company, by protecting it from a foreign group taking control.”
The luxury products sector has shown strong growth since the beginning of the year after the global slump hit their business badly last year.
LVMH, which counts among its brands Givenchy, Dior and Guerlain perfumes alongside Moet and Chandon and Dom Perignon champagnes, said on Oct. 14 its sales had risen sharply, driven largely by Asia and by demand for champagne.
In July Hermes reported a near 23-percent surge in first half sales and doubled its revenue forecast for the year, with Asia continuing to be the driver.
To many, Tatu City on the outskirts of Nairobi looks like a success. The first city entirely built by a private company to be operational in east Africa, with about 25,000 people living and working there, it accounts for about two-thirds of all foreign investment in Kenya. Its low-tax status has attracted more than 100 businesses including Heineken, coffee brand Dormans, and the biggest call-center and cold-chain transport firms in the region. However, to some local politicians, Tatu City has looked more like a target for extortion. A parade of governors have demanded land worth millions of dollars in exchange
Hong Kong authorities ramped up sales of the local dollar as the greenback’s slide threatened the foreign-exchange peg. The Hong Kong Monetary Authority (HKMA) sold a record HK$60.5 billion (US$7.8 billion) of the city’s currency, according to an alert sent on its Bloomberg page yesterday in Asia, after it tested the upper end of its trading band. That added to the HK$56.1 billion of sales versus the greenback since Friday. The rapid intervention signals efforts from the city’s authorities to limit the local currency’s moves within its HK$7.75 to HK$7.85 per US dollar trading band. Heavy sales of the local dollar by
Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) revenue jumped 48 percent last month, underscoring how electronics firms scrambled to acquire essential components before global tariffs took effect. The main chipmaker for Apple Inc and Nvidia Corp reported monthly sales of NT$349.6 billion (US$11.6 billion). That compares with the average analysts’ estimate for a 38 percent rise in second-quarter revenue. US President Donald Trump’s trade war is prompting economists to retool GDP forecasts worldwide, casting doubt over the outlook for everything from iPhone demand to computing and datacenter construction. However, TSMC — a barometer for global tech spending given its central role in the
The Financial Supervisory Commission (FSC) yesterday met with some of the nation’s largest insurance companies as a skyrocketing New Taiwan dollar piles pressure on their hundreds of billions of dollars in US bond investments. The commission has asked some life insurance firms, among the biggest Asian holders of US debt, to discuss how the rapidly strengthening NT dollar has impacted their operations, people familiar with the matter said. The meeting took place as the NT dollar jumped as much as 5 percent yesterday, its biggest intraday gain in more than three decades. The local currency surged as exporters rushed to
RSS