By  on October 23, 2010

PARIS — Luxury titan Bernard Arnault has a foot in the door at Hermès International. The question now is: Will it swing open further?




In a surprising revelation that could ignite a battle for one of luxury’s most hallowed names, LVMH Moët Hennessy Louis Vuitton said Saturday it holds a 14.2 percent stake in family-controlled Hermès, and plans to be a “long-term shareholder.”

The luxury conglomerate, parent of about 60 brands including Fendi, Sephora and Dom Perignon, said it holds more than 15 million shares of Hermès, plus more than 3 million derivative instruments it intends to covert into shares. That eventually would give LVMH 17.1 percent of the share capital, at an investment cost of 1.45 billion euros, or $2.02 billion at current exchange rates.

LVMH moved quickly to squash any takeover speculation, saying it has “no intention of launching a tender offer, taking control of Hermès nor seeking board representation.…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.”

Still, few observers expect Arnault — who famously won control of Vuitton and LVMH in the late Eighties by pitting family member against family member and ultimately launching a hostile takeover bid — will be content with a silent minority holding.

More recently, Arnault, LVMH’s chairman and chief executive officer, waged a long and bitter battle for control of Gucci, which was ultimately stymied when, in 1999, François Pinault stepped in as a white knight and launched a tender offer of his own, allowing PPR to position itself as a rival luxury group.

“I believe LVMH is parking itself in pole position for a future acquisition. It’s only possible to extract the synergies if they control the company outright,” said Luca Solca, luxury analyst at Bernstein Research in London. “This suggests a portion of the family wanted to sell.…This could happen relatively quickly or take many years.”

“Why on earth would LVMH want to take a noncontrolling bystander interest? Surely they are looking to convince a further packet of shareholders,” agreed another luxury expert, speaking on condition of anonymity. “They can easily fund further purchases.”

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