LVMH to sell most of its stake in Hermès

LVMH Moët Hennessy Louis Vuitton, controlled by French tycoon Bernard Arnault, will sell most of its 23% stake in Hermès International, according to news reports. LVMH accumulated the stake, worth $7.5 billion, without Hermès's knowledge via equity swaps. A French court intervened in the four-year-long dispute between LVMH and Hermès's controlling family,

a Bloomberg report noted.

LVMH will sell shares to its shareholders and institutional investors. Arnault's family holding company, Groupe Arnault, will keep an 8.5% interest in Hermès, the Bloomberg article said. Distribution of the rest is scheduled to be completed by December 20, the report said.

Christian Dior, LVMH's largest shareholder, will sell the stock to its own investors. LVMH, Groupe Arnault and Dior have agreed not to buy any more shares in Hermès for the next five years, Bloomberg reported.

The agreement ends all litigation between Hermès and LVMH, the Bloomberg report said. Hermès patriarch Bertrand Puech repeatedly called on LVMH to reduce its stake to less than 10%; Arnault maintained that LVMH had no intention of assuming control of Hermès, the Bloomberg article noted.

The agreement will increase the proportion of Hermès shares that are freely traded to more than 20% from about 7%, the Bloomberg article said. LVMH shareholders will book a capital gain of about €2.84 billion euros, the report said.

A


New York Times




report noted

that Hermès shares fell 6% on the news, while LVMH shares rose about 3.2%. (Sources: Bloomberg, Sept. 3, 2014;


New York Times


, Sept. 3, 2014.)