PARIS -- Bernard Arnault, the king of French luxury goods, has acquired financial control of Guerlain SA, one of the country's most prestigious fragrance houses.

But the Guerlain family, while receiving an estimated $343.5 million in stock, will also be left with a narrow control of the voting. The fragrance firm has been in the Guerlain family for 166 years.

The deal, disclosed here late Friday, calls for Arnault's LVMH Moet Hennessy Louis Vuitton SA to acquire a majority stake in Guerlain following a two-step transaction.

The Guerlains will turn over 49.9 percent of Djedi, the family holding company, which owns 85.8 percent of Guerlain's capital, to Christian Dior SA, a holding company of LVMH, in exchange for Dior stock.

In addition, Christian Dior will receive an additional 2 percent of non-voting shares in the holding company from Jean-Pierre Guerlain, head of the holding company's board, who is in his late 80s.

Arnault announced that in turn Dior would sell this newly acquired interest in Djedi to its affiliate LVMH, which already directly owns 14.2 percent of Guerlain.

This would put 58.7 percent of Guerlain's capital in LVMH's hands. The Guerlain family, however, retains bare voting control by virtue of its remaining 50.1 percent share of Djedi.

"In economic interest we hold the majority, but [the deal] is on two levels, as Guerlain is controlled by Djedi," said Arnault, underscoring the complexity of the acquisition.

In exchange for these shares, Guerlain family shareholders will get 4.35 million shares in Christian Dior, which represents 12 percent of the expanded Christian Dior stock pool.

The sale price of $343.5 million (1.9 billion francs) at current exchange rates is the Arnault's estimate of the value of the Dior shares the Guerlain family will receive.

The Guerlain family has an option to sell its remaining Djedi shares to Dior, and Dior has the right of first refusal.

"The reason for this operation is that the Guerlain family didn't want to sell," said Arnault. "They wanted an association with a group to insure the integrity of the company by keeping voting rights. We have agreed that all important decisions will be taken together, anything from investments and strategy to appointments."

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