LVMH buys 17 percent stake in HERMES and rumours of a takeover intensify
World’s leading luxury group LVMH is finalising this week purchase of a 17.1 percent stake in Hermes, in a move likely to increase speculation it will sell its champagne division (Moet Hennessey) to Diageo to fund a full takeover of Hermes. A dissident family member of Hermes is rumoured to have been at the center of the sale of the shares. In a statement, LVMH said the total cost of the 17.1 percent holding was EUR 1.45billion. LVMH will pay for the stake in cash from continuing operations.
Take over rumours have intensified in the luxury industry circles and business media, despite reassurances from the LVMH of no bidding intentions. "The objective of LVMH is to be a long-term shareholder of Hermès 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," the company said. "LVMH fully supports the strategy implemented by the founding family and the management team. LVMH has no intention of launching a tender offer, taking control of Hermès nor seeking board representation."
UPDATE (October 25th 2010)
Controlling family shareholders of Hermes on Sunday said they were not planning to sell any significant stakes and remained united after luxury peer LVMH acquired a 17 percent holding in their company.
Luxury goods maker Hermes said its long-term control was guaranteed by its status as a French limited partnership — which made takeovers very difficult — and pledged to treat all shareholders, as it had in the past, "with utmost respect."
"The family shareholders have confirmed that they are not contemplating any significant selling of shares," Hermes said in a statement. "They are fully united around a common business vision." Family members own more than 70 percent of Hermes.