The world’s two most powerful luxury brands are getting a bit chummier.
My WWD idol, European editor Miles Socha, reports that LVMH has taken a 14.2% stake in Hermes International. The stake is worth about $2 billion.
Hermes is a public company, but the family behind the brand still owns a controlling stake. (Their share is 71%, to be exact.) LVMH will announce on Monday that they’ve invested in Hermes to “be a long-term shareholder of Hermès and to contribute to the preservation of the family and French attributes which are at the heart of the global success of this iconic brand.”
Does this mean they’re going to try and buy all of Hermes? Probably in the future, but not at the moment.
Hermes is to luxury as Apple is to gadgets. It’s the crown jewel. From the simple Twilly scarf to the coveted Birkin, it’s the ultimate acquisition for the luxury–and fashion–consumer. The company, which also owns high-end cobbler John Lobb, was barely touched by the recession. And its stock has jumped more than 88% over the last year.
For LVMH, Hermes would make them untouchable. (Louis Vuitton already does a good job of that, but nothing competitors PPR or Richemont could offer up will ever come near Hermes in terms of quality, heritage, and overall desirability.)
At this stage in the game, the Hermes family still holds the cards. Will they swiftly buckle to LVMH? Or will this be the lock-down, drag-out, luxury battle of the decade? (We’re kind of hoping for the latter.)
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Wow, hope Hermes doesn’t sell out :(
saddens me the only house left tht can claim luxury will soon me another cog in LVMH´sluxury machine
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I take it from your article, Lauren, that LVMH bought its 14.2% stake on market and not from the family. With a stake of 71% the family’s control is unshakeable, even if LVMH bought all the 14.8% theoretically available on the market. It is not possible for them to launch a hostile takeover, it will depend entirely on how the family interest is divided up and whether any of them wish to sell. 71% is a huge stake in any event. NewsCorp is effectively controlled by the Murdoch family and they have way less than 50% of the available shares.
thank goodness
I agree. But there is always the possiblity that some family members could want some quick cash, though I think it would be stupid to sell shares in such a successful, blue-chip concern.
I very much doubt any of the Dumas/Hermes family will sell the brand in it entirety to LVMH, because they know Arnault only cares about one thing, MONEY. Look at what he’s done to Dior and Louis Vuitton they have essentially lost all of their values, soul and aesthetics that their owners intended for them to maintain. I highly doubt they want to sell their brand, that their family has built over the last 150 years to someone who will likely sacrifice values and perfection in the name of “Luxury profits”.
You’re right that the family still has firm control. However, LVMH isn’t just going to put in 15% as a sideline investor. This is the first step towards something more.
That’s true. Maybe they have had discussions with some family shareholders that lead them to pursue this. I agree that is difficult to imagine LMVH would buying it just for an investment alone. They like to take a hands-on position which is what frightens many of Hermes’ fans.
However, with Hermes doing so well, it is difficult to imagine where family members who sold out could invest the money with better results.
that was exactly my reaction…why would a family member who is part of a controlling share decide to sell out of a successful company? When the WSJ was bought out by Murdoch, the newspaper industry was in the midst of falling revenue from ads, decreased circulation and the rise of blogs. I can see how that may have made the extended family nervous. However, the luxury industry seems to be getting back on track, at least based on BoF. I am very interested to see how this turns out.
To Thierry Pinault: you express it so perfectly but there’s still the issue that Lauren raises – LVMH don’t generally take a significant stake in a fashion company without some long term plan. Most people, including me, regard Hermes as the pinnacle of quality and luxury. I don’t know anything about the family or how their ownership structure works, but there have been cases of long established family firms damaged by disaffected members who don’t appreciate any of the history and just want cash (for various reasons). I certainly hope you are right and that there is no question of any family members selling out. Although the only Hermes items I have bought are a couple of scarves, there is always the dream, and it’s difficult to see dreams destroyed.
2 billion dollars? That’s enough for like 6 Birkins… in crocodile!
Lauren, what do you know about Goyard? They are so under the radar. It would be very interesting of they were to be acquired by PPR or Richemont..
the world is turning into one huge monopoly board game!
testing
test confirmed
http://www.style.com/stylefile/2010/10/the-life-of-keef-often-in-leopard/
were you testing the link part? if so…how do you do it?
No Anita, the links always work fine. You just paste the URL like this…
http://www.youtube.com/watch?v=5RD_Of2wD3g
I was testing the content of the Hermes post on my blog.
This is so disappointing. Hermes is like the last company that’s stayed completely true to its luxury roots and doesn’t cut corners to save costs. Yes, it’s absurdly expensive, but when I buy Hermes I’m never disappointed with the quality in the slightest. Not always the case with pieces I have bought from LMVH group brands!
This is so disappointing. Hermes is like the last company that’s stayed completely true to its luxury roots and doesn’t cut corners to save costs. Yes, it’s absurdly expensive, but when I buy Hermes I’m never disappointed with the quality in the slightest. Not always the case with pieces I have bought from LMVH group brands!
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