H&M’s billionaire owners Persson and family tightening grip with share plan

STOCKHOLM: Hennes & Mauritz (H&M) AB chairman Stefan Persson and his family may be about to consolidate their control of the struggling Swedish fashion giant through an offer that lets investors convert dividends into new shares.

H&M last week proposed an unchanged dividend for 2017 of 9.75 kronor per share.

The company also said the board would “investigate the possibility” of letting all its owners reinvest that dividend into new stock.

Doing so would help H&M handle “continued high investments in areas such as digitalisation,” it said.

Persson, who has a net worth of US$17.7bil according to data compiled by Bloomberg, and his family have made clear they’ll reinvest. If other owners don’t do the same, the family’s stake will increase.

Persson has already spent the past few years raising his position in H&M, leading to speculation that he may seek to take it private. (He’s repeatedly said that’s not his aim.)

If Persson and his family convert their dividend of 6.73 billion kronor (US$856mil) into new H&M shares at the Jan 31 closing price, they would get an extra 48.3 million shares.

If all other shareholders opt for cash, the family’s stake would rise to 43.4%, from the 41.7% held at the end of last year.

If his sister Lottie Tham and her relatives also reinvest, the families’ combined stake would rise to 48.8%.

While it’s hard to know how H&M shareholders will respond to the offer, some analysts say smaller owners might be better off just taking the cash, given the challenges the company faces.

What’s more, an initial response from Sweden’s tax agency suggests shareholders may face a levy before reinvesting.

Andreas Holmberg, an official at the agen- cy, characterised the H&M proposal as “unusual.”

H&M is a very popular stock in Sweden, and it makes up about a fifth of equity holdings with smaller investors, which is “maybe a bit more” than people should have, Claes Hemberg, a savings adviser at online broker bank Avanza AB, said by phone.

”If you believe that H&M will follow the index, keep 10% in the company, but if you don’t, cut to 5%, unless you sell everything,” he said.

Hemberg believes that H&M will lag behind the broader stock market.—