LVMH Buys A $4 Billion Chunk Of Hermès
When it comes to fashion conglomerates, Louis Vuitton Moët Hennessy and Gucci Group are boss. LVMH lays claim to Fendi, Givenchy and Marc Jacobs (among others), while Gucci owns Yves Saint Laurent, Balenciaga, Alexander McQueen and more. And now LVMH has added another horse to their fashion stable: Hermès.
LVMH just announced that it owns a 14.2% stake in the company, and will own a 17.1% stake after they “convert derivative instruments in Hermès shares” (whatever that means). So what does this equate to in terms of cold hard cash? Estimates have LVMH’s current share worth more than $4 billion. However, they plan to let Hermès do their own thing creatively. LVMH said this in a statement:
The objective of LVMH is to be a long-term shareholder of Hermès 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 fully supports the strategy implemented by the founding family and the management team. LVMH has no intention of launching a tender offer, taking control of Hermès, nor seeking board representation.
The Hermès family took the company public in 1993. Even throughout the economic downturn, Hermès has outperformed the market — the price of Hermès shares has risen 88% in this year alone. Sounds like a wise investment, LVMH. Want to buy us a Kelly?
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“Never believe LVMH when it says it does not want to control or seek for board representation.
Just as a few examples among many others, remember how the owner of LVMH has violently got rid of Louis Vuitton, Givenchy and Moet Hennessy family heads, at the time of LVMH Group creation.
If the Hermès founding family wishes to keep its independancy in the years to come, each member needs to be very careful about the performance of the company and cautious about the cohesion of all the members.
Time for the Hermès Family to enjoy a peaceful growth and development is probably ending”
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