For Bernard Arnault there was no urgency

October 19, 2011 12:00 AM
For Bernard Arnault there was no urgency

While rumours ran for years on the interest of Bernard Arnault for Hermes, the pattern of LVMH shot his cards this weekend. The number one global luxury revealed Saturday hold 14.2 of the famous family group for its squares of silk, which was hitherto impregnable Citadel. This participation rise to 17.1 in the coming days, for a total price of EUR 1.45 billion. LVMH (by also owner of the "voices") becomes the second shareholder of Hermès International, behind the descendants of the founders, who control the House through a sponsorship.

Before publishing his release, Bernard Arnault has, it seems, been careful to prevent telephone leaders of Hermes and assure them of the "friendly" operation character. LVMH is not to launch public offer to purchase on the company or to take control, he said Saturday. He is seeking a seat on the Supervisory Board of the malletier. It also indicates that it "will support without reserve the strategy conducted by the founding family and leadership teams".

Within the family, renowned hold 70 of the capital of Hermes, the announcement has created the surprise. Yesterday late in the evening, the company has responded in a press release, stating that "f amiliale ownership is with almost of capital majority and perfectly United (... /...)." "(and) that no significant transfer of capital project is envisaged." Sponsorship by action takes care to specify Hermes provides "the maintenance of long-term monitoring" (see box above-cvontre).

Of course, some supputaient that the escalation of the action of the past few months could be explained by a collection of actions available on the market. Since January 1, the title jumped 89 and sells at exceptional levels: on the stock market, the company is almost 50 times its profits expected this year, a ratio without common measure with those of other groups of the sector, as Tod's (20), Richemont (21) or LVMH (22). Of course, for years, Bernard Arnault did praise on the home of the faubourg Saint-Honoré was. From there to reveal suddenly there hand over half of the shares not controlled by the family...

A point especially raises astonishment. Investment total announced by LVMH corresponds to a very low average purchase price: EUR 80.50 per share. It is almost twice as less than the current, since the action of the Kelly bags manufacturer has reached a new historic Cape Friday at 176 euros. How Bernard Arnault did raise both actions, so cheap No doubt by buying years ago, when the course was still less than 60 euros, first less than 5 participation, that he was not bound to declare. Then, it seems to have acquired not actions, but stock options, which were not also to be made public. It was only at the beginning of last week that LVMH would simultaneously obtained new blocks of shares and exercised the options, the bringing out of wood. A meeting between leaders of Hermès and LVMH would be scheduled shortly. It might help to see more clearly.

A turning point started

What is certain is that Bernard Arnault has not patiently built this position to a coup. This is not a financial participation. No question of the resale, despite a possible added value greater than EUR 1 billion. "Our goal is to be a shareholder in the long term of Hermes and to contribute to the preservation of the family and French character," said the LVMH contrary. Fine tactician, its CEO intends prevent home, very coveted, falls into the hands of one of his rivals as Richemont (Cartier). On the other hand, it is now in place, ready to ride to the capital if some members of the family want to opt out.

Symbol of good taste French, Hermes would be more perfect for LVMH, whose brands are more in the air of the time. A fashion, would add the Ageless.

For Bernard Arnault, there was no urgency. But the moment where it is revealed is not neutral. Since the disappearance in May of Jean-Louis Dumas, who was the patron and the soul of Hermes, the House starts a turning point. In early summer, his son Pierre-Alexis Dumas announced the end of the collaboration with the fashion designer Jean Paul Gaultier put in place by his father. "Hermes is a jewel and not one of its members is to yield," said solemnly in 2008 Bertrand Puech, the Chairman of the Board of stewardship of Emile Hermes, the SARL limited partnership consisting of the descendants of the founder and with nearly all of the powers of management. Members of the sixth generation had then arrived at the controls. But to the record prices achieved by the action, some heirs may one day to be an attempt to assign their shares.