Last year, when Bernard Arnault requested Belgian nationality just as France was introducing a 75 per cent wealth tax, he drew the immediate (and understandable) wrath of his countryfolk. Arnault insisted at the time that he was motivated by a desire to settle various long-running legal issues; rather than avoid tax, he wanted to avoid his children being pitched into a court battle over his assets after his death.
Such was the furore, the LVMH man was forced to withdraw the nationality request. Read more
Breaking pre-market news on Tuesday,
- Air France-KLM ousts CEO — statement. Read more
There’s ripple of excitement in the luxury goods sector on Tuesday morning, following reports that Gucci and Puma-owner PPR is on the prowl.
Having seen arch rival LVMH swoop for Bulgari, PPR is in talks to make une grosse acquisition in the luxury goods sector, according to La Tribune. Read more
Slowly but steadily, it’s happening.
China’s famed production paradise for foreign companies is hollowing out. Amid spiralling wage costs and rising worker activism, some foreign manufacturers have been reassessing their China operations — and a growing number are beating a retreat to cheaper and more accommodating labour environments Read more
Moët Hennessy is set to produce upmarket sparkling wine in north-west China, reports the FT. Moët, which owns historic champagne brands Dom Pérignon, Veuve Cliquot and Krug, has joined forces with a Chinese state-owned agricultural group to develop a sparkling wine in the remote Ningxia Hui region. The wine will not be sold as champagne – a moniker reserved for wines from the eponymous French region – but will cater to Asia’s booming demand for bubbly. The joint venture will include 163 acres of land holdings, with Moët – part of Bernard Arnault’s LVMH luxury empire – in control of a new winery on site. No financial details were disclosed. The end-product will be sold under the Chandon label, a secondary brand which markets wines from non-French domains in California, Brazil, Argentina and Australia.
LVMH, the French luxury goods conglomerate, is to take a controlling stake in Bulgari, the Italian jewellery house, in a $5.2bn all-share deal, reports the FT. Under the deal, the Bulgari family will swap its 51 per cent shareholding, making it the second largest family shareholder in LVMH. The deal strengthens LVMH’s competitiveness with Richemont, the Swiss luxury goods conglomerate, which boasts the Cartier brands and has traditionally been stronger in watches and jewellery. With the Bulgari deal amounting to its largest acquisition in ten years, LVMH is nevertheless keeping hold of its stake in Hermes, which the Hermes founding family wants to see reduced, Bloomberg reports.
As Luxist blog remarked on Monday: “We’ve been so busy watching the drama as luxury mega-conglomerate LVMH Moët Hennessy Louis Vuitton makes moves on French luxury brand Hermès that we didn’t even see them sneaking up on Bulgari”.
The FT, however, scooped the story, reporting on Sunday night (updated on Monday): Read more
Breaking pre-market news on Monday,
- Arcus European Infrastructure makes indicative £16.30p a share cash offer for Forth Ports; due diligence commences – statement. Read more
LVMH, the French luxury goods conglomerate, is to take a controlling stake in Bulgari, the Italian jewellery house, in an all-share deal, reports the FT. The agreement, set to be announced on Monday, will see the Bulgari family tender its 51% share in a share swap that will make it the second largest family shareholder in LVMH, the world’s largest luxury goods group. Bulgari was valued at about €2.3bn at Friday’s close, and the LVMH offer would put a significant premium on that figure. A tender offer for the remaining listed shares will also be launched on Monday. Sources close to the deal said the Bulgari family, including brothers Paolo and Nicola, unanimously agreed to a share swap with Bernard Arnault, chairman and CEO of LVMH. DealBook notes the “peaceful negotiations” contrast with LVMH’s battle with Hermès, whose controlling family is fighting off its acquisitive rival.
Breaking pre-market news on Friday,
- LVMH reports 13 per cent rise in fourth quarter sales; hikes dividend by 27 per cent — statement. Read more
Hermès is to pay an interim dividend for the first time, boosting the efforts of family shareholders to hold off the stakebuilding by LVMH, the luxury goods company headed by Bernard Arnault, reports the FT. Hermes said it would pay an interim dividend of €1 on Feb 10, citing record net cash flow and pre-tax profits expected to be 40% higher than in 2009. Patrick Thomas, chief executive, said the interim dividend was unconnected with the planned creation of a family holding company into which most Hermès shareholders are to deposit shares, using the dividends to buy out other members. He spoke as the company announced a 25% increase in 2010 sales to €2.4bn ($3.3bn), or 19% in constant currency terms. Reuters meanwhile reports that LVMH is expected to announce a rebound in luxury sales when it reports earnings on Friday.
Hermès International’s family shareholders won an important victory on Thursday in their battle against Bernard Arnault, the head of LVMH Moët Hennessy Louis Vuitton, when French authorities said they could group the family’s shares without having to offer to buy out minority shareholders, reports DealBook. The French market regulator, AMF, had been asked to rule on the legality of the family’s plan to place more than 50% of the shares in a new holding company. The family, which holds about 73% of Hermès, has argued that its de facto control means there will be no change in ownership. Under French law, an investor who acquires more than one-third of a company must make an offer for the rest of its shares.
French luxury-goods giant LVMH has increased its stake in rival Hermès International to more than 20%, increasing tensions in its unwelcome assault on the luxury French fashion house, reports the WSJ. In a Tuesday filing with France’s securities regulator, LVMH said it now owns 20.2% of family-controlled Hermès. On Tuesday, LVMH left the door open to further purchases of Hermès shares, insisting in its filing that its swoop was friendly and that it supported Hermes’ strategy. But the family behind Hermès has expressed doubts about the sincerity of LVMH chairman Bernard Arnault, known for pouncing on family businesses and seizing control. Bloomberg adds that the increased stake may boost speculation that Arnault is gradually targeting a takeover of Hermes.
A bid to delist French luxury goods maker Hermes from the stock exchange is unlikely, a family shareholder and top manager told Italian newspaper Il Sole 24 Ore, reports Reuters. Hermes is setting up a holding company to fend off rival LVMH, which in October revealed it had built a 17.1% stake in Hermes. The move requires clearance from French regulator AMF that the holding company does not have to bid for the whole of Hermes. Guillaume de Seynes, a descendant of founder Thierry Hermes and now operational Number 2, said a delisting had its attractions but would be too costly. Such a buy-out would cost up to €4bn ($5.3bn); Hermes has a market cap of €16.6bn, the report added.
Hermès family shareholders plan to set up a holding group with more than 50% of the capital of the luxury goods company, in an effort to counter the stakebuilding by unwanted shareholder Bernard Arnault, CEO and chairman of LVMH, reports the FT. The announcement on Sunday followed a meeting of 40-50 Hermès family members on Friday to discuss ways to boost control of the company. Under their plan, some 73 descendants of founder Thierry Hermès, who hold a combined 73.4% of Hermes, will cede part of their dividend to a new holding company which will have first right of refusal on members wishing to sell shares. The WSJ says the move could require the launch of a full takeover offer, although an exemption could be granted if the regulator agrees the family is “reclassifying” shares.
The “handbag” war between two French luxury goods companies intensified after France’s stock market regulator on Friday opened an inquiry into how LVMH managed to build a 17.1% stake in smaller rival Hermès International, reports the FT. Jean-Pierre Jouyet, chairman of the Autorité des Marchés Financiers, said France was “the Wild West” when it came to corporate takeovers and that regulations should be tightened. LVMH said it was “delighted” to hear of the probe, adding it would allow it to establish that it has “scrupulously respected the regulations”. But then, asked DealBook, “how is it possible that these corporate raiders were able to accumulate such large positions without anyone knowing?”
We now know how this man — LVMH chairman Bernard Arnault — managed to amass a 17 per cent holding in Hermès without anyone knowing, and at a purported 50 per cent discount to the prevailing market price
As suspected, the ‘Wolf in the cashmere coat’ owned a 4.9 per cent stake in Hermès which he topped up using “equity swaps,” according to a statement from the French stock market regulator AMF. Read more
LVMH, the French luxury goods house controlled by Bernard Arnault, has reaped a paper profit of about €2bn ($2.8bn) from its audacious raid to build a 17% stake in Hermès International, reports the FT. Shares in Hermès rose on Monday by as much as 17% on disclosure of the LVMH interest in the luxury accessories maker. The move seems to have surprised the stock market, Hermès management and the families that control the group. In deals that reinforced Arnault’s image as a canny dealmaker, LVMH added to a long-term stake in Hermès just below France’s 5% threshold for disclosure. But, FT Alphaville asks, how precisely did “the wolf in the cashmere coat” do that?” See also Monday’s Markets Live transcript.
Remember the Volkswagen fruit machine?
Well, the situation developing at Hermes International, following the daring market raid by the Wolf in the cashmere coat, bears something of a resemblance to the short squeeze that developed in the German carmaker two years ago. Read more
They don’t call Bernard Arnault the “wolf in the cashmere coat” for nothing.
The latest master-stroke from France’s richest man is the acquisition of 17 per cent stake in Hermes International at a 50 per cent discount to the prevailing market price. Read more
LVMH, the world’s largest luxury goods company by sales, has moved to the front of the race for one of the sector’s most desirable brands by taking a 17 per cent stake in Hermès International, according to the FT. LVMH — maker of Louis Vuitton bags and Tag Heuer watches — paid less than half the market price for the shares due to the use of derivatives, despite Hermès having one of the most expensive valuations in the sector. Analysts are pretty convinced that LVMH has positioned itself for an outright acquisition despite the company’s protestations, Bloomberg reports. The share price of Hermès has climbed since the death of its founder in May, with other founding family members seen as more willing to sell.
LVMH, the world’s biggest luxury goods company by sales, has snapped up 17.1% of Hermès International, positioning it to take control of the top luxury brand should the family owners wish to sell, reports the FT. LVMH has bought 15m Hermès shares equivalent to a 14.2% stake, and also holds derivatives, which when converted will give it an extra 2.9%. Industry experts praised the move, in which LVMH paid less than half the market price for the shares through the use of derivatives. The €1.45bn (£1.3bn) cost of the 17.1% stake equates to €80.50 a share, against Hermes’ Friday closing price of €176.20. Lex lauds the deal and wonders how LVMH chief Bernard Arnault got such a bargain. Presumably, “the sellers agreed on the price before the shares almost doubled in 2010″.
Breaking pre-market news on Thursday,
-African Barrick Gold says systematic on-site fuel theft will hit production forecast — statement. Read more
This CDS report was written by Markit’s Gavan Nolan
European credit indices outperformed their equity counterparts today, continuing the trend from yesterday. The Markit iTraxx Europe index tightened 152bp, over 3bp tighter than yesterday’s close, while the Crossover was 25bp tighter at 841.5bp. Tightening credits outnumbered names that widened by about four to one, helped by a strong primary market.
Credit Suisse was among the best performers after it announced strong first-quarter earnings. The Swiss bank said it earned SFr2 billion, more than double the consensus forecast and a vast improvement from the preceding quarters. Like its US peers Goldman Sachs and Morgan Stanley, Credit Suisse gained from robust profits in fixed-income trading. Credit investors were also encouraged by its strong capital position and a reduction in the size of its illiquid CMBS portfolio. Read more
LVMH has indicated it may be willing to sell some or all of its two-thirds stake in Moët Hennessy, its wine and spirits business, to partner Diageo. LVMH, part of the French luxury empire controlled by Bernard Arnault, approached Diageo this year to gauge its potential interest in buying the rest of Moët Hennessy. The companies held informal discussions, but LVMH has not yet decided whether to part with the asset.
Jonathan Birchall, the FT’s US consumer correspondent, reflects upon LVMH’s recent results and the performance of global luxury brands
The global luxury brands company seems to have shrugged off the collapse of the luxury market in the US. Read more
This CDS report was written by Markit’s Gavan Nolan
European credit spreads widened today in a quiet session. The Markit iTraxx Europe index gave back all of its gains made in November by blowing out 12bp, with widening credits outnumbering tightening names by about four to one. Cyclical credits led the deterioration, notably in the retail and car making sectors. Read more
LVMH is nearing a deal to sell its Omas pen business to Hong Kong watch distributor Xinyu Hengdeli, reports the WSJ, ending the French luxury-goods group’s foray into the writing-instruments category. LVMH decided to sell Omas because the Italian pen business never fit in with its watches and jewelry business division. Omas remained a small business, with several million euros in annual sales. Xinyu will buy a 90 per cent stake, with LVMH retaining 10 per cent.
Journalists at Les Echos, the FT’s French sister paper, have on their own initiative secured a €245m bid from Fimalac, the Paris-listed owner of the Fitch credit rating agency. The FT Group, the Pearson subsidiary that owns Les Echos and the FT, last month entered exclusive negotiations to sell the French title to LVMH, the luxury goods group controlled by Bernard Arnault. Les Echos journalists protested that their reputation for editorial independence would suffer under LVMH, which was willing to pay €240m for the paper – 24 times Les Echos’ 2006 operating profit.
Vincent Bolloré, the French investor, on Thursday declared that he might bid for La Tribune, the French financial newspaper, were it to be put up for sale by LVMH. The future of the loss-making title has come into question after LVMH entered exclusive talks to buy Les Echos, La Tribune’s profitable rival, from the Financial Times Group, the Pearson arm that publishes the FT. LVMH, which is controlled by Bernard Arnault, France’s richest man, is likely to sell La Tribune if the Les Echos talks end in a deal.