LVMH agrees to peace deal with Hermes family

FRANCE’S richest man Bernard Arnault yesterday agreed to relinquish most of his $7.5bn (£4.5bn) holding in luxury goods maker Hermes International, bringing to an end a bitter four-year battle.
Arnault’s LVMH Moet Hennessy Louis Vuitton agreed to distribute most of its 23.2 per cent stake in Hermes among its shareholders and not to acquire any shares in its smaller family-owned group for five years.
Christian Dior, LVMH’s largest shareholder, has also agreed to distribute Hermes’ shares among its shareholders.
The agreement, overseen by a French court, will effectively prevent LVMH from making a full takeover bid for the 177-year-old leather bag maker, Arnault’s holding company owning a 8.5 per cent stake in the business.
Shares in Hermes, which have soared over the past four years on the prospect of a takeover, fell 3.4 per cent yesterday to €253.75 while LVMH’s shares edged 2.9 per cent higher to €136.90.
The row between the two companies erupted in 2010 when it emerged that LVMH had built a 17 per cent stake in Hermes. It made the investment through a series of equity derivatives instead of straightforward share purchases, which prevented it from having to declaring them.
Hermes, led by the sixth-generation member of the family Axel Dumas,, vehemently protested at having its arch-rival as its biggest external shareholder and created a new holding company controlling 52 per cent of Hermes’ shares.
LVMH was fined last year by French markets regulator AMF for failing to properly disclose the stake-building.
The pair said yesterday they had “reacted favourably” to the agreement, which had “brought to an end the conflict, and all related actions” between them.