Louis Vuitton, Hermes call truce in battle for luxury brands
A four-year shareholder war between two titans on the global luxury products battlefield, Hermes and LVMH (makers of Louis Vuitton bags), ended with a truce on Wednesday.
It drove down Hermes shares and left LVMH with a big profit.
LVMH, a leader in the global luxury business, had built up a holding of slightly more than 23 per cent in smaller rival Hermes, opening hostilities by first acquiring 14.2 per cent discreetly in 2010 by means of complex financial instruments.
This holding is now worth about 6.8 billion euros (S$11 billion).
The Hermes family, shocked at this initial incursion into their share capital, closed ranks and grouped most of their shares in a holding company.
This had the effect of ring-fencing control in the boardroom and closing the door to any takeover by LVMH.
Litigation followed, largely over the legal and financial techniques used by either side, to gain the upper hand.
Under the deal announced by LVMH on Wednesday, and brokered by the president of the Paris commercial court, LVMH is to distribute all of its shares in Hermes among its own shareholders, and undertakes not to buy any Hermes shares for five years.
Source: AFP
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