LVMH Holds More Than 20% of Hermès

French luxury-goods giant LVMH Moët Hennessy Louis Vuitton has increased its stake in rival Hermès International to more than 20%, increasing the tension in an unwelcome assault on the French maker of pricey handbags, scarves and other luxury goods. In a filing Tuesday with the French stock market regulator, LVMH said it now owns 20.2% of family-controlled Hermès. On Tuesday, LVMH left the door open to the further purchases of Hermès shares. In the filing, the company reiterated that its swoop on Hermès is friendly and it supports the strategy of the fashion house, which is known for its leather goods. The company characterized its stake as "strategic and long-term," and that it doesn't seek control of the company, which got its start making saddles back in 1837. But the family behind Hermès doubts the sincerity of LVMH Chairman Bernard Arnault, who has expanded his luxury-goods empire by pouncing on family businesses, dividing the clans and seizing control. LVMH is the world's largest luxury-goods company, measured by sales. Bertrand Puech, who heads one of the main branches of the Hermes family, has asked Mr. Arnault to sell his shares. Hermès Chief Executive Patrick Thomas called Mr. Arnault "an intruder in our garden." Mr. Arnault, one of France's most aggressive corporate raiders, surprised the family behind Hermès two months ago by announcing he had racked up a 17.1% stake in their company. LVMH bought its new shares on and off the market, the company said in the regulatory filing with the Autorite des Marches Financiers, or AMF. In addition, LVMH said it owns equity swap contracts worth another 0.2% of Hermès. Mr. Arnault used equity swaps to stealthily build up his initial stake in Hermès over the past several years, a move that caused the AMF to open an investigation last month into LVMH's move. The family, which says it controls 73% of the maker of Kelly and Birkin handbags, is determined to remain independent. A limited partnership that is open only to direct descendants of Hermes' founders protects the company from an unwanted takeover. But despite this shield, the family earlier this month announced plans to reinforce its defense by creating a separate holding firm comprising more than 50% of the company. The creation of the holding company is pending AMF approval.