Sunday, October 14, 2012

Paris Prosecutor Examines Hermes Complaint against LVMH
The Paris Prosecutor's office has opened a preliminary inquiry into a complaint by Hermes International concerning LVMH acquisition. This will decide whether the prosecutor drops the case or hands it over to an investigating judge.  But next let's talk about the nature of the complaint.

Back in 2010 French Billionaire Bernard Arnault of the Moet Hennessy  Louis Vuitton  (LVMH) brand led LVMH to merge with the Hermes International brand and bought 17 % stake of shares becoming a stakeholder. Today, that number has grown to 22 % stake of shares.

Fearful of a takeover by LVMH, Herme's complaint alleges that Arnault's moves were the product of insider trading, collusion, and price manipulation. In order to avert the threat of a takeover, the Hermes family created a new holding company controlling 52 shares. However, Arnault continued to buy shares. As a result, this July, Hermes filed complaint. Moreover, in response to the complaint, LVMH company representative said "LVMH has no intention of launching a tender offer, taking control of Hermes or seeking board representation."    

In response, LVMH has filed a counter complaint  alleging slander, blackmail, and unfair competition.

Fashion Legallaire's Assessment: LVMH is known for brand takeovers from Donna Karan International to Glenmorangie Plc., and  Hermes fears that he could be one day bought out acquisition style if Arnault continues to buy shares.

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