Skip to main content

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.

Scroll to Continue

Recommended Articles

Related Stories

Business

Bernard Arnault Says LVMH's 22.6% Stake in Hermès Was 'Unexpected'

LVMH and Hermès are in the midst of an ugly legal battle over LVMH's apparent relentless pursuit of Hermès and the potentially unlawful ways in which the luxury conglomerate came into 22.6% of the heritage brand. While LVMH's investments have been described as a gradual hostile takeover, Bernard Arnault now insists that is not the case. In fact, it wasn't even on purpose!

By Dhani Mau
Business

LVMH Wants to Make Louis Vuitton More Like Hermès

France's largest luxury conglomerate wants to get even more luxurious--and they're taking inspiration from a luxury brand they've been admiring for a while now: Hermès. LVMH has been buying shares in Hermès since 2010 and their unyielding interest in the heritage brand has prompted speculation that LVMH intends to one day add Hermes to their own portfolio. For now, though, they'll settle for using Hermès as a business model in an effort to ensure that Vuitton retains its image as "exclusive" and its "high-end mystique," says a report from Reuters. The challenge Louis Vuitton faces, along with many widely recognizable name brands who feature heavily in rap songs and knock-off operations, is expanding and increasing profits without seeming too mass or attainable, especially given the ubiquity of their signature monogram. Their solution is to just keep providing even more expensive products and services that even fewer people can afford--like artisanal made to order handbags (that won't look like Canal St. knock-offs)--and a more exclusive shopping experience.

By Dhani Mau
Business

Hermès Proposes New Tactics to Prevent LVMH Takeover

LVMH now owns 22.3 percent of Hermès and the Hermes family is doing whatever they can to prevent that percentage from rising. Ever since LVMH bought a huge stake in Hermès in 2010, Hermès, an old luxury label rooted in craftsmanship and tradition, has worried about a hostile takeover by the French conglomerate. Shortly after the purchase, Hermès essentially told Bernard Arnault to back off, saying it was a "cultural battle," not a financial one. Last year, Hermès created a separate family holding company that controls over 50% of shares and protects them from LVMH. And now Hermès has made another move to protect themselves.

By Dhani Mau
Business

LVMH Somehow Manages to Increase Stake in Hermès

Well this is unexpected. LVMH was recently fined $10.4 million over the way in which it acquired a 17% stake in Hermès (Hermès alleges LVMH came by the shares unlawfully, LVMH said they acquired the shares "unexpectedly"). In addition to appealing that decision, LVMH filed a lawsuit against an Hermes manager, most likely for alleging publicly that LVMH had come into its stake in Hermès in fraudulent ways. At the time, LVMH had a 22.6% stake in Hermès. Now, LVMH has a 23.1% stake.

By Dhani Mau