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Hermès Granted Exemption by French Market Authority

Firm will no longer be compelled to launch an IPO as it fends off possible LVMH takeover.

PARIS – France’s stock market regulator said it would grant a request from Hermès International to be exempted from buying out minority shareholders in its attempt to fend off a potential takeover bid by LVMH Moët Hennessy Louis Vuitton.

 

The AMF said it would publish its full decision in due course following a meeting today of its 16-member committee.

 

LVMH revealed last month that it has boosted its stake in Hermès to 20.2 percent after its initial stock acquisition of a 17.1 percent share of capital through cash-settled equity swaps. The AMF is separately examining whether LVMH violated market rules by buying the shares via equity swaps.

 

Though LVMH chairman and chief executive officer Bernard Arnault has said he is not seeking full control of the maker of Birkin handbags and silk scarves, Hermès has vowed to protect itself from what it considers an unwelcome suitor.

 

The Dumas, Puech and Guerrand families collectively own more than 70 percent of the shares in Hermès International, a limited partnership structure that guarantees they keep control of management. Still, they want to reinforce that by grouping more than 50 percent of the capital into a nonlisted holding company.

 

This would normally oblige the luxury firm to launch an offer for the remaining shares, since it would be crossing the threshold of one-third of capital or voting rights. Hermès had asked the AMF for an exemption on the grounds that the family effectively controls the company already.

 

Colette Neuville, president of the French Association for Minority Shareholders (ADAM), has vowed to file an appeal in the case of an exemption, arguing this unfairly penalizes holders of the less than 10 percent of the company’s capital that is freely traded.

For complete coverage, see Friday’s WWD.