French luxury goods firm LVMH to buy Christian Dior fashion for R170bn

FRENCH billionaire Bernard Arnault will combine the Christian Dior fashion brand with his LVMH luxury goods empire as part of a ß12-billion (R170-billion) ) move to simplify his business interests – a restructuring long demanded by investors.

Under a series of complex transactions, LVMH, the world’s largest luxury group, will buy the Christian Dior Couture brand from the Christian Dior holding company for ß6.5-billion (R92.5-billion), including debt.

The deal will unite the 70-year-old fashion label worn by film stars from Grace Kelly and Elizabeth Taylor to Jennifer Lawrence and Natalie Portman with the Christian Dior perfume and beauty business already owned by LVMH.

The Arnault family, which holds a 47% stake in LVMH, will also offer to buy the 25.9% of the Christian Dior holding company it does not already own for about ß260 (R3 700) per share, a premium of 15% over Monday’s closing price.

“The transactions will allow the simplification of the structures, long requested by the market, and the strengthening of LVMH’s Fashion and Leather Goods division,” Arnault said.

LVMH shares rose almost 5% to a record high of ß225 (R3 134) as investors welcomed the deals, which they expect to boost LVMH earnings. Dior shares also jumped 13% to a new high of ß256 (R3 645).

“This is a good acquisition for LVMH in our view given the strong brand of Christian Dior, good use of its balance sheet and it reunites the Christian Dior brand with the very profitable perfume operation that LVMH operates,” Barclays analysts wrote in a research note.

LVMH said it would use a loan to pay for Christian Dior Couture, which has 198 stores in more than 60 countries, and whose sales have doubled over the past five years.