LVMH Poised To Take Over Hermes?

by Ariel Adams (RSS feed)
Nov 4th 2010 at 8:01PM

"If you are friendly, you will withdraw Mr. Arnault" - a statement recently made by Hermes Group board to LVMH CEO Bernard Arnault. Recently LVMH acquired a full 17 percent of Hermes stock, signaling a possible move to take over the popular family-owned luxury brand. Hermes is one of the last remaining family-owned major luxury brands, most are part of larger groups such as LVMH and the Richemont Group. LVMH is said to be the largest luxury group in the world.

After acquiring the large stake in Hermes, LVMH announced that it did not have current intentions to take over Hermes. Hermes has made it very clear that they do not wish to be part of a large luxury group - a move that would fundamentally change how the brand is run and operated. Hermes seems to be dedicated to remaining independent, which is understandable given the massive changes that occur when large groups take over such brands.

The good name of Hermes would benefit LVMH that already has names such as Louis Vuitton - arguably a direct competitor of Hermes. With Hermes under its belt, LVHM would have more ammo to fight the Richemont Group - which is arguably its largest competitor. At issue are a range of products such as leather goods, lifestyle products, clothing, watches, jewelry, and more.

While LVMH seems clear in their dis-intent to take over Hermes completely at this time, the act of buying 17 percent of the stock is not without meaning. LVMH likely wants to prevent other groups from taking the brand over, and may also be planning out ways of engaging in a future friendly or hostile take over. Hermes family members are said to retain about 73 percent of all Hermes shares. So LVMH would have to negotiate the family members directly in order to pursue such a takeover - who have special rights associated with Hermes bylaws in order to prevent hostile takeover attempts. Stay tuned in the next year or so to see what becomes of this potential take over attempt.

Via Reuters.

Ariel Adams publishes the luxury watch reviews site aBlogtoRead.com.

Tags: Hermes, LVMH, shares, stock, take over, takeover