Byline: Thomas Cunningham

NEW YORK — LVMH is increasing its share in Inter Parfums Inc.
The fragrance company said Tuesday that LVMH Moet Hennessy Louis Vuitton and the two principal shareholders of Inter Parfums — founders Jean Madar and Philippe Benacin — had reached an agreement in principle that allows LVMH to pay $12 a share to increase its stake in the company to 20 percent from 6.3 percent.
The deal is the latest in a string of strategic investments made by LVMH chairman Bernard Arnault, including his purchase of controlling interests in the U.S. beauty brands Benefit, Bliss and Hard Candy and his $747 million deal for Swiss watch firm Tag Heuer, announced earlier this month.
LVMH disclosed in August that it had paid $4.2 million for 467,400 shares of Inter Parfums, giving it a 6.3 percent interest in the company. It said then that it wanted to increase its participation in the company on a “friendly basis.”
Now that Inter Parfums has LVMH as a strategic partner, the two companies can look at creating fragrances for brands in LVMH’s portfolio, Madar, chairman and chief executive, said in a telephone interview Tuesday. He declined to say, however, which brands would be the most likely candidates for a fragrance.
“You have seen what they [LVMH] have been buying,” he said. “We’ll start looking in the next 90 days and I’m sure we’ll put together the list of potential business that LVMH can bring to the table.”
Under the agreement, expected to close in early November, LVMH will also get two seats on the Inter Parfums board, according to Madar. One will go to Daniel Piette, president of LVMH’s fashion group, he said.
Madar said had worked with Piette when Inter Parfums arranged to license the Christian Lacroix fragrance from LVMH earlier this year. He said he did not know who the second representative would be.
Inter Parfums, formerly Jean Philippe, also makes fragrance and cosmetics brands under the names Intimate, Paul Smith, Parfums Molyneux Jordache and Ombre Rose. The firm also makes “knock-off” fragrances that it sells at a lower price than similarly scented designer brands.
The LVMH purchases will dilute Madar’s and vice chairman Benacin’s joint holdings to around 60 percent from 64, according to Madar. The deal also includes a standstill provision that limits LVMH’s ability to gain control of Inter Parfums, but Madar declined to disclose how long that provision would remain in force.
Inter Parfums’ stock gained 1/16 to close at 10 in over-the-counter trading Tuesday. At that price, the company is worth $74.2 million and LVMH’s 20 percent stake would be worth $14.8 million.
Madar also provided an update on Inter Parfums’ plans for the next 12 months. The Christian Lacroix fragrance is scheduled for a launch next month in Europe, the Mideast and the Far East, to be followed by a spring 2000 launch in the U.S., he said. The licensed Paul Smith fragrance will launch in the U.K., France and Japan next year, he added.
The company distributes its products mainly in the U.S. and Europe. It also has a majority stake in the French firm Inter Parfums SA, which distributes fragrances in over 100 countries.