Hermès Moves to Defend Themselves From LVMH

Ah, to live the life of a fashion mogul. While the rest of us save up to buy the hottest new styles for each season, or deal hunt to get the maximum amount of luxury for our buck the men and women who control the most powerful fashion brands in the world engage in an entirely different and far more grand type of holiday shopping; buying up entire companies to add to their fashion empires. The problem is that unlike handbags and shoes, other companies don’t always want to be bought. Just ask Bernard Arnault, CEO of LVMH (Moet Hennessy Louis Vuitton) the largest luxury conglomerate in the fashion world, who apparently has french fashion house Hermès on his Christmas wish list. The problem is that the Puech family, direct descendents of Thierry Hermès, who represent the fifth generation of family ownership don’t want to sell; or at least don’t want to sell to LVMH. Bertrand Puech, who manages the family’s involvement in Hermès was quoted by Women’s Wear Daily (WWD) as saying that they had a “unanimous will to maintain long-term control of the company”.

LVMH turned heads last  month when it was discovered that the company had purchased over 17% of Hermès’s publicly traded shares and that it had done so without anyone at Hermès realizing who it was doing the buying. While the French government is now checking the specifics of the transaction to ensure everything was done on the up-and-up, an LVMH spokesman already told New York Magazine that they are confident that the investigation will prove the purchase was legal (even if it was sneaky). If that is the case, it does not bode well for Hermès considering the reputation of Bernard Arnault, who has proven in the past he has no problems with hostile takeovers. Under Arnault’s leadership LVMH has grown to include a very impressive list of fashion labels beyond Louis Vuitton, such as Donna Karan, Givenchy, Marc Jacobs, Celine and Fendi.

However it seems Hermès has no intention of being added to the list of Mr. Arnault’s conquests without a fight. WWD reported earlier this week that the Puech family has finalized plans to transfer the the majority of their shares (they still own over 70% of the company) to a nonlisted holding company. A move designed to prevent any more of Hermès capital from falling into the hands of LVMH and Mr. Arnault. It should be noted though that Bernard Arnault did not become the most powerful man in fashion by taking “no” for an answer. Will Hermès be able to maintain its identity and hold its own against the giant that is LVMH or will they become yet another trophy for Mr. Arnault. Only time will tell.

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