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Hermes Faces Shareholder Scrutiny

Minority shareholders are contesting planned moves by the company to fend off a potential takeover by LVMH.

PARIS — Minority shareholders are contesting planned moves by Hermès International to fend off a potential takeover by LVMH Moët Hennessy Louis Vuitton.

Colette Neuville, president of the French Association for Minority Shareholders (ADAM), on Thursday called for French market regulator AMF to turn down any request for Hermès to be exempted from rules regarding ownership thresholds should the luxury firm implement special measures to protect itself from a buyout.

Shares in Hermès have risen 12 percent since the start of the week on a report in weekly Le Journal du Dimanche that the Hermès family shareholders were due to meet today to discuss strategies to fend off further advances from LVMH, which surprised markets in October by revealing it had taken a 17.1 percent stake.

A spokeswoman for Hermès declined all comment on the newspaper report.

The family is said to be mulling options, including grouping their shares into a nonlisted holding or striking a shareholders’ pact.

Neuville said that by doing so the family members would be grouping their shares into a bloc, effectively crossing the threshold of a third of capital or voting rights. According to French market regulations, they would then be obliged to launch an initial public offering for the company.

Hermès officials have said the three family branches — Dumas, Puech and Guerrand — collectively own 73.4 percent of capital, but the shares are spread between dozens of heirs to Thierry Hermès, who founded the company in 1837.

Neuville said she recently met with Hermès’ lawyers, who argued the company should be exempted from the rules that trigger a takeover bid, because any attempt to protect themselves against LVMH should be considered a reassignment of shares between companies or persons belonging to a single group.

Neuville said she disagreed with this assessment, since company officials had declared in filings to its general assemblies between 2000 and 2005 that no single shareholder controlled the capital of Hermès International.

“This is a new legal construct which they are trying to have admitted,” she said. Neuville said that if the AMF granted Hermès an exemption, the ADAM would appeal the decision at the Paris Court of Appeal. Officials at the AMF were not available to confirm whether they had received any such request from Hermès.