There’s been an interesting development over the past couple of days. It seems that LVMH is set be investigated by French regulators over their recent surprise acquisition of Hermes stock. On Monday, we reported that the luxury conglomerate LVMH had increased its stake in Hermes to over 17 per cent. We speculated that this might be indicative of plans to increase interest in the future, and it seems the authorities saw it the same way. A spokesperson from LVMH stated that it did not plan a takeover, but wanted to be a long-term investor.
An issue has arisen over when the shares were purchased, since they were bought at an average price of 80.5 euro, 50.4 per cent cheaper than Friday’s price of 176.2 euro. It has been asserted that LVMH had breached rules by secretly building up a stake in the French leather goods company. Investors are supposed to declare their intentions for the future when their share reaches 10 per cent. It is likely that the small stake previously owned by LVMH was purchased with options to build up stake later down the track. Nonetheless, hedge fund managers are eager to learn the details of this transaction, and so are we at the MO Down. French regulator AMF will handle the investigation. We will keep you posted. Till then, Reuters has more info.
Image credit: ehow.com
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