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LVMH Takes Control of Bulgari

LVMH Moët Hennessy Louis Vuitton, the French luxury conglomerate, said Monday that it would take control of Italy’s Bulgari in an all-share deal, adding another high-end brand to its formidable stable in a deal worth 3.7 billion euros.

The Bulgari family has agreed to exchange its 51 percent controlling stake in the jeweler for 16.5 million LVMH shares, making it the second-largest family shareholder in the group. The family will also gain two seats on LVMH’s board, the company said.

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The move will see LVMH, which owns champagne brand Moet, Hennessy spirits and leather goods brand Louis Vuitton and Fendi eventually hold a 17.1 percent stake in Hermes, which is known for its high-end leather handbags and silk scarves.

“The objective of LVMH is to be a long-term shareholder of Hermes and to contribute to the preservation of the family and French attributes, which are at the heart of the global success of this iconic brand,” LVMH said in a statement on Saturday. LVMH said it had bought 15,016,000 shares of Hermes, or a 14.2 percent stake for €1.45 billion euros or U.S. $2 billion. Once it converts certain derivative instruments of Hermes shares, LVMH said it would hold a total of 18,017,246 shares, or a 17.1 percent stake.

The surprising move is likely to trigger questions over the intentions of LVMH’s CEO Bernard Arnault. The French businessman took control over LVMH in 1990 after three years of internal power struggle and has often expanded its reach through acquisitions of iconic brands.

Hermes, which has held up better than peers in the economic downturn, has long been the subject of market speculation over whether some family members would sell shares, altering the group’s capital structure or even making it a takeover target. Management have reiterated the founding family’s devotion to Hermes, in which family members own a 70 percent stake as of the last available public data.

It was not immediately clear how LVMH had built up such a large stake in Hermes, or whether it had bought shares on the open market or from family members. Based on the information given in its statement on Saturday, LVMH seems to have acquired the 17.1 percent stake for an average share price of 80.50 euros per share.

Hermes shares have risen 88 percent since the beginning of the year to close at 176.20 euros per share on Friday. It also means that Arnault has already seen a significant upside to his investment in Hermes. Based on today’s valuations, the stake would be worth almost 3.17 billion euros, giving LVMH an implied profit of 1.7 billion euros if it were to sell its Hermes shares today.

Hermes could not be reached for comment; the group’s spokeswomen did not return calls and emails on Saturday.

LVMH Moet Hennessy Louis Vuitton SA chose Japanese architecture firm SANAA, whose principals won the Pritzker Prize last month, to convert the defunct La Samaritaine department store in Paris into a hotel.

The plans for the development, which also includes commercial space, offices and social housing, will be presented at the end of the year, the Paris-based company said today in an e-mailed statement.

LVMH will invest 400 million euros ($541 million) in La Samaritaine, which should open in 2013, Sonia Fellmann, a spokeswoman for LVMH, said in a telephone interview. LVMH, which also owns Le Bon Marche department store, acquired La Samaritaine in 2001 and closed it in 2005, saying the building was a fire hazard. LVMH won approval last year to convert the 141-year-old Art Nouveau structure into a hotel.

Tokyo-based SANAA was founded in 1995 by Japanese architects Kazuyo Sejima and Ryue Nishizawa, who won the Pritzker. SANAA’s previous projects include New York’s New Museum of Contemporary Art and the Christian Dior SA flagship store in Tokyo.

(c) 2010 Bloomberg/Businessweek

French luxury goods giant LVMH Moet Hennessy Louis Vuitton has announced plans to inaugurate a new World Series of sailing, beginning with a regatta in Nice in November. The event, to be known as the Louis Vuitton World Series, will be undertaken in association with a new professional sailing group called the World Sailing Team Association (WSTA). Eight racing teams, including K-Challenge (France), BMW Oracle Racing (USA), Emirates Team New Zealand, Mascalzone Latino (Italy), Team Artemis (Sweden), Team Synergy (Russia), Joe Fly Italia (Italy) and Team French Spirit (France) will compete for starters, with others expected to sign up shortly.

Vuitton has a long association with world class sailing dating back to its 25-year sponsorship of the Louis Vuitton Cup, the famed race running up to the America’s Cup, and more recently the Louis Vuitton Pacific Series organized in Auckland, New Zealand, last February. LV World Series teams will fight successive duels over a fortnight on two pairs of identical boats chosen by lot in an effort to return to the original spirit of “match racing.” The ultimate winner of the series of international regattas will take possession of what is bound to become one of the sports most coveted and prestigious trophies.