LVMH has been raising eyebrows since news broke that they had acquired 17.1% of Hermes’ stock.
Were they trying to circumvent traditional business tactics with a covert intention of buying out and taking control of Hermes?
After all, Hermes requires anyone who buys over 15% of their share capital to make a statement of intent.
LVMH complied, stating that they have no intention of taking control of Hermes or making a public offer in the next six months.
Interestingly, whether or not they intend to buy more shares of stock was not mentioned (the Hermes family own 71% of the shares).
Hermes, it turns out, is not the least bit interested in a takeover, and have now asked LVMH executives to withdraw from their capital.
While LVMH Chairman and Chief Executive Officer Bernard Arnault, notorious for his ruthless battles with Louis Vuitton and Gucci, has repeatedly stated that LVMH has no plan to take over Hermes, few seem to believe him. The Hermes family is claiming that the surprise LVMH purchase is a threat to the label’s interest.
They deem the conglomerate’s actions as “unfriendly” saying, “If you want to be friendly, Mister Arnault, you need to withdraw." The family further maintains that they are not the right fit for the type of large-scale operation that is involved with LVMH, adding that they consider this a cultural rather than a financial battle.
Only time will tell whether LVMH’s actions will be considred illegal, and whether they will in fact relinquish the shares they bought. However, it would be quite sad to see one of the world’s few remaining iconic brands not already owned by a conglomerate be taken over by a powerhouse like LVMH, and the quality of goods would likely suffer as a result.