Hermes Prepares to Strike Back Against LVMH Empire... 07/12/10

The situation at Hermes is keeping us fascinated here at the MO Down. Following up on our recent coverage, the Dumas family met on Friday (December 3) to discuss their battle strategy. For those of you just tuning in, we are of course referring to the recent controversy that arose when LVMH revealed its ownership of a 17.1 per cent stake in Hermes. It was quite an unwelcome surprise to the family-owned Hermes, which is now faced with the possibility of a gradual takeover. The Dumas family aren’t happy, and to be honest, neither are many people. Hermes shares fell 9.3 per cent on Friday, and something tells us this was no coincidence.

Currently, the Puech, Guerrand and Dumas families own a combined stake of 73 per cent– no one is taking over anything without their permission. However, the families are hunting for a strategy to allow them to sell shares as needed, without allowing LVMH boss Monsieur Arnault to increase his holding. Hermes is not keen to join the family owned brands that have fallen to the conglomerate. It stands firm as a house of artisans, before businesspeople. Several schemes are in the works at the moment, and we will bring more as soon as we hear…

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Hermes Moves to Counteract LVMH Takeover 30/11/10

Following up on the Hermes/LVMH debacle, the most recent news from Bloomberg is that Hermes has called a ‘round table’ with the Dumas family to develop a strategy to tackle the large, and not so quiet, monogrammed elephant in the room. For those of you just tuning in, the MO Down has been following LVMH’s sudden acquisition of Hermes shares, amounting to 17 per cent. The surprise revelation a few weeks ago has sparked rumours of a hostile takeover, and led to speculation that a third party may be needed to keep Hermes in the family.

It seems the most recent options include a shareholder pact or the creation of a non-listed holding, company grouping together to protect the descendants’ shares. Recently, the MO Down suggested that luxury conglomerate Richemont might come to the party. Reuters suggests that other institutional friends such as BNP Paribas Bank, and Bank of America Merrill Lynch might help out… At times like this, Hermes needs its friends, so it will be interesting to see if someone, and if so, who, can save the day…

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Can Richemont Save Hermes From LVMH Takeover? 16/11/10

There has been a lot of controversy and speculation surrounding LVMH’s recent acquisition of Hermes shares. We have stumbled across a very interesting article by Bloomberg here at the MO Down. If Hermes needs a white knight to ride to its defence, to fend off any prospective (and potentially hostile) majority buyout by Monsieur LVMH Bernard Arnault, they may find it in Richemont. The Swiss luxury goods company, and third largest luxury conglomerate in the world, might just have room in their wallet for a hint of orange.

Bloomberg hypothesises that Richemont may not have enough money, however in the financial overview from the Richemont press release, sales have increased by 37 per cent, or 27 per cent at constant exchange rate, or 22 percent excluding the impact of Net-A-Porter with an increase in operating profit of 95 per cent. It’s a great result that could compound even more positively over the next 6 months (boosted by Christmas and Chinese New Year trading). It’s nice to know Hermes has another option should it require.

Still, we hope Hermes has enough Euro in its Birkins to canter ahead confidently without support. The family shareholders, who collectively own 73 per cent of Hermes are fighting hard to keep the company independent. We are following all happenings closely and will report as soon as we hear.

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Hermes 3rd Quarter Results See Sales Up 31%... 11/11/10

We’ve said it before, and we’ll say it again: things are looking up for the luxury industry. All Hermes business sectors have indicated growth this quarter, and according to media representatives at Hermes, all major world markets have indicated growth also– excluding Japan, where sales dipped 1 per cent.

In Europe, sales rose 19 per cent during the third quarter, in the USA, by 23 per cent (the opening of the first Hermes store dedicated to men on Madison Avenue in NYC is perhaps largely responsible for this). Non-Japanese Asia demonstrated an astronomical 41 per cent increase in sales, to be expected given the company’s increased concentration in investment in the region– three new stores have opened in China since the beginning of the year. Other exciting initiatives have included the new Shang Xia brand.

It’s exciting to see Hermes doing so well, and we wonder if these reports of success will up the anti re: the recent controversy surrounding LVMH’s acquisition of Hermes shares. LVMH is still insisting it has no plans for a takeover, but regardless, has clearly made a solid investment. Hermes plans to maintain control of its operations and has motions in place to increase its distribution network. Its plan for sustaining its current growth, you ask? The answer lies in its creative designs and the vitality of its craftsmanship. Of course, as one of the world’s most iconic luxury fashion names, we are hardly surprised.

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Feud Between Hermes and LVMH? 05/11/10

We’ve been closely following the happening surrounding LVMH’s acquisition of Hermes shares here at the MO Down, and there has been an interesting development.

Monsieur Arnault, Europe’s wealthiest man (incroyable!) and CEO of the mighty LVMH group, has a history of getting his way. Let’s face it– he is an incredibly astute businessman, regardless of whether or not you like his modus operandi. Monsieur Arnault has his well-trained luxury eye firmly on one prize in particular. We’ll give you a hint: it’s something iconic and orange in colour. The primarily family-owned Hermes is firm in its stance that the business remain theirs at 73 per cent, and it looks like it could become a fight to the death for one of France’s most iconic brands.

It was a surprise revelation when LVMH revealed its acquisition of 17 per cent last week. Despite Msr. Arnault’s adamant denial that the move signifies future plans for a takeover, Hermes isn’t convinced. ‘If you want to be friendly Arnault, you should withdraw’ said Hermes representatives, questioning LVMH’s motivation. Hermes isn’t interested in becoming part of the luxury conglomerate. Msr. Puech (fifth generation heir of Emile Hermes, founder) told French paper, Le Figaro, ‘we are artisans; our goal is to make the best products in the world. We aren’t in the business of luxury, we’re in quality.

It’s rare to see such hostility between such big names and we can’t help but be fascinated to see how this plays out. We will continue to update as we hear…

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LVMH Acquisition of Hermes Shares to Be Examined By Regulators 27/10/10

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.

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LVMH Increases Its Undercover Stake In Hermes 25/10/10

Global luxury conglomerate LVMH SA has increased its stake in the quintessentially French maison, Hermes, to over 17 per cent. Until this recent acquisition of 14.2 per cent, it was not public knowledge that LVMH owned shares at all. In France, owners holding under 5 per cent can remain anonymous.

We wonder if this will turn out to be another classic ‘ghost muncher’ situation that will see LVMH incrementally increase their shares to ownership. Stranger things have happened, and we are sure Hermes is a name worth acquiring. Nonetheless, ‘not so’ says LVMH right now. ‘The objective of LVMH is to be a long-term shareholder of Hermes’ said an unidentified spokesperson. Apparently they like what Hermes is doing, and are simply interested in investing in this company because of what they do and how they do it. Hermes is certainly an industry leader, commanding a level of respect not afforded to many. Added bonus, when Hermes shares are doing so well.

Call us cynical, but when the likes of LVMH bid a fine bonjour and pay for it, you can be sure that there is a future strategy in place. We won’t be surprised if they raise the holding soon enough. Time, of course, will tell. Follow this link for more info.

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