Her­mes strength­ens LVMH de­fense with hold­ing com­pany

The Pak Banker - - Company& -

PARIS: Her­mes In­ter­na­tional SCA's fam­ily share­hold­ers sought to bol­ster their de­fense against a pos­si­ble takeover by LVMH Moet Hen­nessy Louis Vuit­ton SA by set­ting up a hold­ing com­pany for more than 50 per­cent of the share cap­i­tal.

The pro­posed hold­ing com­pany will have first right of re­fusal on the re­main­ing shares held di­rectly by the fam­ily, Her­mes said in an e-mailed state­ment late yes­ter­day. The fam­ily "have reaf­firmed their unity and their con­fi­dence in the so­lid­ity of their cur­rent con­trol of Her­mes." The com­mit­ment to cre­ate the ma­jor­ity hold­ing is "ir­rev­o­ca­ble."

Her­mes, the maker of Kelly hand­bags that re­tail for about 7,000 eu­ros ($9,375), has said that the fam­ily is "fully united" in its de­sire to re­tain con­trol of the 173-yearold com­pany af­ter LVMH an­nounced in Oc­to­ber it had acquired a 17.1 per­cent stake via eq­uity swaps and would con­sider buy­ing more.

Her­mes fam­ily mem­bers, who own 73.4 per­cent of the com­pany, need a mech­a­nism to al­low share­hold­ers to sell with­out LVMH swoop­ing on the stock, said a per­son fa­mil­iar with the mat­ter. Fam­ily mem­bers sold an av­er­age 0.5 per­cent of the share cap­i­tal an­nu­ally over the last decade, said the per­son, who de­clined to be iden­ti­fied be­cause the talks were pri­vate.

Her­mes hired BNP Paribas SA and Bank of Amer­ica Corp. as ad­vis­ers last month to help fend off a pos­si­ble LVMH takeover bid. LVMH, which has said it doesn't in­tend to seek a board seat or con­trol, can't bid for all of Her­mes un­til at least April 23, ac­cord­ing to French reg­u­la­tions.

Her­mes dropped as much as 7.25 eu­ros, or 4.8 per­cent, to 143.30 eu­ros and traded at 146.65 eu­ros in Paris trad­ing at 9:15 a.m. The stock has surged 57 per­cent this year, boost­ing the com­pany's mar­ket value to 15.4 bil­lion eu­ros. Fewer than 10 per­cent of Her­mes shares are now freely traded, ex­ac­er­bat­ing any move­ment in the stock. LVMH stock was lit­tle changed in Paris and has gained 55 per­cent this year, valu­ing the com­pany at 59.6 bil­lion eu­ros. Chief Ex­ec­u­tive Of­fi­cer Bernard Arnault has built his com­pany into the world's largest lux­ury-goods com­pany by snap­ping up brands from Donna Karan In­ter­na­tional Inc. to Glen­morangie Plc.

He bought a 5 per­cent stake in Gucci Group in 1999, say­ing LVMH didn't in­tend to make a full bid, then in­creased the hold­ing to 34 per­cent within a month. Arnault, ranked sev­enth on the Forbes mag­a­zine list of the world's rich­est peo­ple, even­tu­ally lost a bat­tle for Gucci to French ri­val PPR SA.

The pro­posed hold­ing com­pany is sub­ject to ap­proval from the French stock mar­ket reg­u­la­tor, Her­mes said yes­ter­day. Olivier Labesse, a spokesman for LVMH, de­clined to com­ment on the hold­ing com­pany yes­ter­day.

A for­mal align­ment of the relatives' shares means they would be act­ing in con­cert un­der the rules of French stock mar­ket reg­u­la­tor Au­torite des Marches Fi­nanciers, oblig­ing them to make a bid for the rest of the stock, Co­lette Neuville, pres­i­dent of mi­nor­ity share­holder group Adam said on Dec. 3, be­fore the hold­ing com­pany was an­nounced.

Lawyers ad­vis­ing Her­mes on the pos­si­ble struc­tures avail­able for the fam­ily to bar­ri­cade their stake dis­puted Neuville's read­ing of the rules, she said. The lawyers took the view that Her­mes's SCA sta­tus means the fam­ily al­ready con­trols the com­pany and that any new struc­ture to emerge from the Dec. 3 meet­ing would war­rant a sim­ple "re­clas­si­fi­ca­tion" to the AMF of their ex­ist­ing po­si­tion, she said. -Bloomberg

Newspapers in English

Newspapers from Pakistan

© PressReader. All rights reserved.