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LVMH and Hermès Make Peace Over Market Shares

The luxury giants have ended their ongoing feud just in time for Fashion Month.

LVMH Moët Hennessy Louis Vuitton and Hermès have been locked in a legal conflict concerning the former’s growing stake in the latter — which has grown to 23 percent — but thanks to the intervention of the Commercial Court of Paris, the two luxury giants have made peace, just in time for Fashion Month.

For a bit of background, Bernard Arnault — the CEO of LVMH and the wealthiest man in France — was buying up shares of his competitor’s stock without them knowing through “equity swaps” over the last few years, and he accumulated a whopping €6 billion (about $7.8 billion) holding in Hermès. Naturally, Hermès fought back, and took legal action in hopes of keeping Arnault from taking control of the company — even though Arnault insisted that his intentions were not hostile.

According to a release distributed on Wednesday, both parties signed an agreement proposing that LVMH "will distribute all its Hermès shares to its shareholders, on the understanding that LVMH’s largest shareholder, Christian Dior will in turn distribute the Hermès shares it receives to its own shareholders." In addition, none of the aforementioned parties will be able to purchase more shares in Hermès for the next five years. At the end, Groupe Arnault will hold about 8.5 percent of the capital in Hermès.

Hermes CEO Axel Dumas and Arnault are both apparently "satisfied" with the terms of the agreement, and the brands' good relations have been restored. Well, this should certainly make things less awkward during Paris Fashion Week.

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