PARIS — Bernard Arnault keeps gobbling up shares in Hermès International.

This story first appeared in the December 22, 2010 issue of WWD. Subscribe Today.

In a disclosure that is likely to stoke hostilities between the two camps, Arnault’s LVMH Moët Hennessy Louis Vuitton said Tuesday it had crossed the threshold of owning 20 percent of the shares in Hermès, the maker of Birkin handbags and silk scarves.

Arnault, chief executive officer of LVMH, surprised markets when he revealed in October that he had accumulated a 17.1 percent stake in Hermès via cash-settled equity swaps that allowed him to circumvent the usual market rules requiring firms to declare share purchases.

Although Arnault said he had no plans for a full takeover, the move rattled representatives of family-owned Hermès, who have vowed to protect their company from what they deem an unwelcome suitor.

LVMH said in a filing to stock market regulator AMF that it now holds 21,338,675 shares, or 20.2 percent of the share capital, through its subsidiaries LVMH Fashion Group, Altair Holding LLC, Ivelford Business SA, Bratton Services Inc. and Ashbury Finance Inc.

A spokesman for LVMH said the luxury conglomerate would not provide additional details or comment. An Hermès spokesman also declined to comment on the filing.

Under French rules, companies must make a declaration every time they cross a series of thresholds, starting at 5 percent and ending at 95 percent. The next benchmarks for LVMH are 25 percent, followed by 33.3 percent, which is the trigger to file a public takeover bid or offer of exchange.

However, it appears unlikely that LVMH will be able to buy more Hermès shares in a hurry, since the three family branches — Dumas, Puech and Guerrand — collectively own more than 70 percent of the capital, leaving a free float of less than 10 percent.

A luxury analyst, who requested anonymity, said he did not think the share increase was significant as it will likely take LVMH years to erode family unity and accumulate enough stock to take over Hermès.

“They have gone up from 17 percent to 20 percent, and on the opposite side, the family has maybe 72 percent and a limited partnership,” the analyst said. “That doesn’t really get them anywhere.”

Arnault could chip away at the family’s Hermès holdings for years, said a banker, who pointed to the ceo’s methodical approach while building LVMH. And Arnault’s pursuit of the luxury house would carry little risk.

“He’ll do OK no matter what,” the banker said. “If he loses, his stake will be very valuable.”

The limited partnership structure puts decision-making authority in the hands of family members. Hermès recently said it was further reinforcing its defenses by grouping more than 50 percent of its 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, but Hermès has asked the AMF for an exemption on the grounds that the family effectively controls the company already.

The AMF expects to publish a decision within the next few weeks. The regulator is conducting a separate probe into whether LVMH violated market rules by accumulating the shares through equity swaps.

The battle between Arnault, France’s wealthiest man, and the Hermès clan has dominated headlines in recent weeks. Recently, representatives of minority shareholders joined the increasingly heated debate.

Colette Neuville, president of the French Association for Minority Shareholders (ADAM), vowed to file an appeal if the AMF granted Hermès an exemption, arguing that this would unfairly penalize holders of the less than 10 percent of the company’s capital that is freely traded.

Meanwhile, Pierre Godé, vice chairman of LVMH, denounced a “campaign” against the luxury giant after a shareholder consultancy called on Arnault to clarify his surprise purchase of Hermès shares.