LVMH Abandoned Its Acquisition Of Hermes, And Last Year It Entered Its 5 Billion Euro Club For The First Time.

The Bernard Arnault family announced yesterday that it will take 12 billion 100 million euros to acquire the remaining 26% stake of Dior group held by minority shareholders.

It is noteworthy that the family owns

Shares will be used to acquire Dior group. Under the tender offer, the Bernard Arnault family will pay 172 Euro Cash for each Dior group stock and 0.192 shares of Hermes shares.

Insiders say that Dior is the favorite brand of Bernard Arnault, even more than LV.

The Arnault family passed the acquisition in 1984.

The owner of Willot Group (later renamed Financiere Agache by Bernard Arnault) became the major shareholder of Dior group, when Dior group's performance was very bad.

After a series of strategic adjustments, Sidney Toledano was hired as the chief executive of the brand to lead the global expansion of the brand. The performance of Dior group was gradually on the right track and resumed growth.

After the acquisition, LVMH will also have Dior's perfume cosmetics and fashion department. It is estimated that the sales volume of Dior fashion department is expected to expand to 3 billion euros in 2020.

In addition, Dior group will no longer operate any actual business and become a pure holding group. It will continue to hold 41% of LVMH group and 56% of the voting rights.

As a luxury brand with many classic products, Hermes has been coveted by many private equity funds and Bernard Arnault, and LVMH has always wanted to attract Hermes.

According to industry insiders, Hermes was almost bought by LVMH.

In 1999, LVMH acquired a hostile takeover of Gucci, thanks to the Paris spring (now open cloud group) intervention and Gucci's failure.

In October 2010, LVMH acquired 17.1% shares of Hermes in the stock market in a complicated way through 1 billion 450 million euros, becoming the second largest shareholder apart from the Hermes family.

However, as a luxury brand with a strong family character, Hermes has always resisted the offer offered by the outside world.

In 2011, Patrick Thomas, the chief executive of Hermes, immediately filed a lawsuit against the LVMH group in a hostile takeover of the group's shares, and issued a statement saying, "if you want to tempt a beautiful woman, please don't rape her from behind."

In 2013, after a series of federal investigations, litigation and countercharges, the two sides finally reached a settlement agreement, that is, LVMH to compensate Hermes 8 million euros, and in the next 5 years can not buy any shares of the latter. The court decided that the LVMH group would reduce the 23% holdings of Hermes to 8%.

A French industry authority believed that the LVMH group's acquisition of Hermes group shares to gain control is a malicious takeover.

Luxury analyst Thomas Chauvet also expressed support for the Arnault family's decision to abandon Hermes and focus on developing LVMH.

Olivier Abtan, partner and managing director of BCG Boston Consulting Group, believes that the LVMH group's acquisition of Dior fashion department is a positive move. He stressed that although the average annual growth rate of luxury industry is usually between 2% and 5%, LVMH group will grow faster.

A group insider revealed that despite the fact that Hermes was dropped, Chanel remained the biggest competitor of LV in the eyes of Bernard Arnault, 68 years old.

As of press release, Dior group's share price rose 11% yesterday to 252 euros per share.

Shares fell 4.51% to 440.75 euros per share, while LVMH shares rose 3.94% to 223.15 euros per share, with a market value of 113 billion 200 million euros.

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