The final verdict is not yet in on whether or not LVMH came into its 22.6% Hermès stake using secretive, illegal methods in an attempt to take over the competing French luxury brand. However, AMF, the French market authority that has been investigating the case, has proposed its recommended sentence: 10 million euros or about $13 million, which is the the maximum fine based on the time the incidents occurred (if they had occurred today, the maximum fine would be 100 million euros).
Granted, LVMH is worth about $70 billion, meaning $13 million is like pennies for the luxury conglomerate. Still, LVMH is swearing up and down that it did not come into its Hermès shares intentionally, and had no intention of taking over the family-owned company.
According to WWD, LVMH’s lawyer Georges Terrier repeatedly argued that AMF did not have proof--only "clues"--of its allegations that LVMH was months too late in disclosing information about converting cash-settled equity swaps into shares. LVMH's vice president Pierre Godé added that “At no moment did we have the aim of growing [our stake]. It was opportunistic. The progressive steps were made one after another, we never had a global vision.” He also says LVMH "could have no hope" of taking over Hermes because of how "well protected" it is as a company. Of course, Hermès only took measures to protect itself because of LVMH and its perceived plans to take it over.
Godé also made the surprising claim that LVMH has been cooperative with Hermès: “The Hermès family has asked us if we would accept to reduce our stake, to 15 percent in the first instance,” he said. “We said, ‘Why not?’” However, there's no solid evidence of such a conversation taking place, and it goes against past reports that Hermes had repeatedly asked LVMH to sell its shares, to no avail.
So far, LVMH's case is looking pretty thin. And while it ultimately won't cost LVMH that much, the final verdict in the case could set a precedent for what a public company has to disclose in terms of its strategic intentions when it comes to investments.