Byline: Miles Socha / Courtney Colavita

MILAN — The game of one-upmanship continues. Gucci Group said Wednesday it planned to appeal the March 8 decision by a Dutch court to order
a probe into its strategic alliance with Pinault-Printemps-Redoute.
Gucci said the decision of the Enterprise Chamber of Amsterdam’s Court of Appeal, considered a victory by rival LVMH Moet Hennessy Louis Vuitton in its quest to break up the alliance, was made on “insufficient grounds.”
The decision to appeal, while widely expected, unleashed an acrid retort from LVMH and squelched speculation that the two warring luxury groups might be trying to negotiate a solution to LVMH’s troublesome 20.6 percent stake in Gucci.
As reported in these columns Tuesday, shares in Gucci, PPR and LVMH have all been spiking in recent days in the expectation of a settlement to the two-year standoff between the two French groups. But industry sources said Wednesday there are no talks between PPR and LVMH at present.
The court battles are the fallout from a failed hostile takeover bid by LVMH for Gucci in 1999. Gucci eventually brought in PPR as its white knight and strategic partner, and in doing so diluted LVMH’s stake in the firm and definitively blocked its bid to take over Gucci.
On Wednesday, Gucci reiterated that, despite its plans to appeal, it is “fully prepared to cooperate with a court-ordered inquiry.” However, it said “the facts have not changed and the law has not changed since 1999 when the Court did not find it necessary to order an inquiry. Gucci will continue to defend vigorously its strategic alliance with PPR, which it believes was entered into in accordance with Dutch law.”
Reacting swiftly to Gucci’s announcement, LVMH said the move demonstrates Gucci’s “desperation” in the face of the investigation. In fact, LVMH said Gucci’s appeal will not block the investigation, which it said will be concluded in about six months.
Further, LVMH said it is confident “the investigation will confirm the improper nature of the agreement entered into between Gucci and PPR and that once it is complete, the Enterprise Chamber will cancel the PPR share issue as an act of mismanagement in contravention of applicable Dutch laws.”
Illustrating the gulf of perception between the two warring groups, each had a different take on the progress of the investigation, with LVMH describing it as well under way and Gucci not even confirming its commencement. Sources close to Gucci said none of its executives had yet been contacted by the three Dutch businessmen appointed as investigators by the court.
Reached by WWD, one of the investigators, J.S. Rijkels, said he was not at liberty to discuss the nature and timing of his work, but confirmed that “the investigation has started in principle. We are obliged to do our duty.”
Rijkels declined to speculate about what impact an appeal might have on the course of the investigation. “We have not been informed at this time,” he said. However, an appeal to the Supreme Court of the Netherlands could take more than a year — long after the Dutch investigators are expected to deliver their findings and recommendations.
The original ruling by the Enterprise Chamber, which had sanctioned the partnership between Gucci and PPR and threw out LVMH’s original request for a probe, was delivered in May 1999. But it took the Dutch Supreme Court until last September, some 16 months later, to annul the original ruling. LVMH subsequently refiled, and was granted, its request for a probe.
LVMH has repeatedly said it would like to see PPR launch a full bid for Gucci, or see the partnership cancelled altogether. It was a custom-made share issue for PPR that diluted LVMH’s initial 34 percent stake in Gucci to its current 20.6 percent. The two French groups, headed by rival entrepreneurs Francois Pinault and Bernard Arnault, have been pelting each other with lawsuits and accusations ever since.
As reported, the court-appointed investigators could dissolve the partnership that has been the platform for Gucci’s luxury acquisitions drive. The probe is focused on Gucci’s management practices during the five months between January and May 1999, during which time Gucci fended off LVMH’s hostile advances by naming PPR its white knight.
In March 1999, Gucci handed PPR a 40 percent stake in the firm via a new share issue, and received about $3 billion in return, earmarking the cash for luxury acquisitions. PPR has since bought a further 2 percent of Gucci and is by far its largest shareholder.
Since joining forces with PPR, Gucci has purchased Yves Saint Laurent, Boucheron, Sergio Rossi, Bedat & Co., Roger & Gallet, Alexander McQueen and Bottega Veneta.