LVMH becomes shareholder of Hermès International raising questions of an outright acquisition
On its journey to take over and rule the luxury products market, famed luxury house, LVMH Moët Hennessy Louis Vuitton has acquired shares of another very famous luxury brand, Hermès International. According to the latest announcement, LVMH now holds 15,016,000 shares of Hermès International, representing 14.2% of the share capital of the company. The reason behind this acquirement according to LVMH is to be a long-term shareholder of Hermès and to help in the preservation of the family and French attributes of the famed brand. LVMH has further stated that it has no intention whatsoever of launching a tender offer, taking control of Hermès or seeking Board representation. But analysts claim that LVMH is only bidding its time and waiting for the right time to make its next move.
However, LVMH intends to ask for conversion of the derivative instruments of over 3,001,246 Hermès International shares which it currently holds. This conversion would allow LVMH to hold 18 017 246 Hermès International shares, or 17.1% of its capital. The total cost of this share holding is estimated to be a cool €1.45 billion ($2billion)!
Given LVMH’s history of snapping up brands from Donna Karan International Inc. to Glenmorangie Plc., one can’t help but agree with the analysts’ view that LVMH is only “ playing a waiting game,” for an outright acquisition of the famed Birkin handbag maker.