LVMH Picks Up A Share Of Hermes

by Deidre Woollard (RSS feed)
Oct 23rd 2010 at 9:02PM

Luxury conglomerate LVMH has gobbled up a piece of the desirable luxury brand Hermes. The Financial Times reported that LVMH announced that they purchased 15,016,000 shares of Hermès International, a 14.2 percent of the share capital of the company. Through various other actions the company plans to increase its share to 17.1 percent. In the announcement LVMH was very careful to state that its goal is not to take over control of the company or even sit on the Board. The announcement states that the objective of LVMH is to be a "long-term shareholder" 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."

Still, there is reason to be concerned, often when a company takes a piece of another company it's often a prelude to takeover. And while the share is relatively modest at this point, footholds have a tendency of growing with time. Even in this uncertain luxury climate Hermes has continued to thrive making it a hot commodity. LVMH got to be LVMH by absorbing a variety of previously family-owned businesses, there's no guarantee that Hermes might not someday be one of them.

Tags: hermes, Louis Vuitton Moet Hennessy, lvmh