LVMH Continues Its Hermes Conquest, Increasing Stake to Over 20%

Despite objections from family-owned French luxury-goods company Hermes, global luxury retailer LVMH Moët Hennessy Louis Vuitton has increased its stake from 17.1 percent to more than 20 percent. In a filing Tuesday with the French stock market regulator Autorite des Marches Financiers or AMF, LVMH said it now holds 21,338,675 shares but that the buy-up supports Hermes’ strategy of the fashion house. The company described its stake as “strategic and long-term,” and that it doesn't seek control of the company. Measured by sales, LVMH is the world’s largest luxury-goods company, and is run by French businessman Bernard Arnault. The latest LVMH purchase makes Arnault the largest individual shareholder of Hermes. LVMH bought its new shares on and off the market, the company said in the regulatory filing with the AMF and also owns equity swap contracts worth another 0.2 percent of Hermes, known for its Birkin bags, scarves and luggage. Arnault used equity swaps to build up his stake in Hermes over the past several years, which prompted the AMF to investigate LVMH’s actions relating to the purchase last month. The Hermes family collectively owns 73.4 percent of their company and consists of fifth- and sixth-generation descendants of the company’s founder. On December 5, the family formed a limited partnership that is open only to direct descendents of Hermes’ founders and protects the company from an unwanted takeover. The company did not make a statement by close of day Tuesday. LVMH owns major luxury brands such as Louis Vuitton, Dior, Givenchy and Dom Perignon.