LVMH to acquire Christian Dior Couture for US$13.0 billion

The world’s largest luxury group LVMH said Tuesday it plans to buy Christian Dior Couture, a wholly-owned unit of Christian Dior SA, for US$13.0 billion.

At the same time, the Arnault family who own 74 percent of the parent company, Christian Dior SA, will acquire the remaining 26 percent in a move to streamline the current shareholder structure, LVMH finance chief Jean-Jacques Guiony told a telephone news conference.

Christian Dior activities include leatherware, Haute Couture, read-to-wear, jewellery and shoes and has a global network of 198 luxury boutiques and its sales have doubled over the past five years.

Last year, revenues amounted to more than 2 billion euros and it booked underlying or operating profit of 270 million euros. Under the current group structure, Christian Dior Couture is wholly owned by Christian Dior SA, which for its part also holds a 41-percent stake in LVMH.

By making it a wholly-owned subsidiary, LVMH would be able to harness its “high growth potential” of Christian Dior Couture, the statement said.

At the same time, the Arnault Family Group is planning a public takeover offer to purchase the shares in Christian Dior SA it does not already own. The bid will take the form of a cash offer of 172 euros per share, plus 0.192 shares in Hermes International, the statement said.

The simplification of the shareholder structure appeared to please investors and LVMH shares were showing a gain of around three percent on the Paris stock exchange in response to the news, while the blue-chip CAC 40 index was up just 0.1 percent.

Luca Solca of Exane BNP Paribas, said he sees a number of positives in the deal. “It adds a strong brand to the LVMH portfolio at a reasonable valuation and on an accretive basis,” he said. “It [also] reduces the risk of LVMH potentially buying ‘trophy assets’ at the expense of ROIC dilution.”

Dior Café at Ginza Six in Tokyo