Hermes family creates majority holding company

The family shareholders of leather bag maker Hermes announced on Sunday the creation of a holding firm with more than 50% of Hermes International's capital, in a move to defend it against takeover by luxury giant LVMH. The family said in a statement that its new holding company would be distinct from Emile Hermes SARL and would have preference rights on the remaining stock owned by the family members, who together hold about 73.4% of the stock. "The family's commitment to create this majority holding is irrevocable," it said. "This internal reclassification will not have any effect on the family's stake in the capital of Hermes International or its partnership." LVMH, led by billionaire businessman Bernard Arnault, rattled Hermes in October when it revealed it had taken a surprise 17.1% stake in its smaller peer, later saying it wanted to buy more shares. The family shareholders, who number around 60, have said they consider Arnault's move unwelcome and have called for him to withdraw from Hermes' capital. One of the strategies discussed to defend Hermes from a takeover was to create an unlisted holding company for the family shareholding and agreeing shareholder pacts, a person familiar with the matter told Reuters on Friday. Hermes stock was down 7% on Friday, surrendering only a portion of the 16% gains made earlier this week as massive volume on Tuesday sparked market speculation of a big block trade ahead of the family meeting. LVMH had declined to comment on the share price moves. The family said it would appeal for the definitive approval of France's AMF stock market regulator before setting it up. It may then need to ask France's AMF stock market regulator for a special exemption from rules forcing it to make a public takeover offer for the whole company. The threshold in such cases is 33% ownership. But French minority shareholder association Adam warned this week it would demand that the family make a full offer. Hermes said last month it expected to post further double-digit percentage sales growth next year, though this would not match the record level expected for 2010.