LVMH takes 14.2 percent of Hermes, no takeover planned
LVMH, the world's leading luxury retailer, said Saturday it had taken a 14.2 percent stake in Hermes but denied it wanted to take over the French luxury goods firm.
The company controlled by French businessman Bernard Arnault said it wanted to boost the stake to 17.1 percent at a total cost of 1.45 billion euros (two billion dollars) but was not seeking even representation on the Hermes board.
In a statement LVMH said that it holds 15,016,000 shares of Hermes International, with the objective "to be a long-term shareholder of Hermes 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."
It added that "LVMH fully supports the strategy implemented by the founding family and the management team, who have made the brand one of the jewels of the luxury industry.
"LVMH has no intention of launching a tender offer, taking control of Hermes nor seeking Board representation."
The statement said LVMH also holds derivative instruments over 3,001,246 Hermes shares and intends to request their conversion.
"LVMH would then hold a total of 18,017,246 Hermes International shares, or 17.1 percent of its capital. The total cost of this shareholding would, in this case, be 1.45 billion euros."
Previously LVMH owned less than five percent of Hermes shares, the threshold beyond which shareholders must declare themselves.
The luxury products sector has shown strong growth since the beginning of the year after the global slump hit their business badly in 2009.
LVMH, which counts among its brands Givenchy, Dior and Guerlain perfumes alongside Moet and Chandon and Dom Perignon champagnes, said on October 14 its sales had risen sharply, driven largely by Asia and by demand for champagne.
In July Hermes reported a near 23-percent surge in first half sales and doubled its revenue forecast for the year, with Asia continuing to be the driver.
© 2010 AFP