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Monday, October 25, 2010

LVMH Buys 14% of Hermes


LVMH Moet Hennessy Louis Vuitton, the world's leading luxury products group, said it has bought 14.2 percent of the share capital Hermès International. The luxury good conglomerate now holds a 17.2 percent of the famed fashion house.


Its objective is to be a long-term shareholder of Hermes 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,” LVMH said in a statement. The company adds that it has no intention of launching a tender offer, taking control of Hermès or seeking board representation.

According LVMH paid less than half the market price for the shares due to the use of derivatives. The $2 billion cost of the 17.1 percent stake equates to about $112.50 per share, about half of what the company was valued because of the use of derivatives, according to the Financial Times. Following news of the acquisition over the weekend, shares shot up an additional 15 percent.

Hermes said it learned of the move on Saturday, just an hour before a public announcement by LVMH, according to media reports. Heirs of the Hermès family, who own 70 percent of the fashion house, on Sunday said they had no plans to sell any of their stake and had not sold any shares to LVMH.

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