Hermes sets up holding company to guard against LVMH

Dee has been sending me updates on the slow battle between LVMH and Hermes for the latter’s shares. Today, Bloomberg reported that the family that owns Hermes has proposed to set up a holding company, which will have the first right of refusal on the shares that the family directly holds. This means that anyone in the family selling his shares must first offer the shares to the holding company (not LVMH).

It seems that Hermes’s lawyers have more to say than its bankers do — from the article, that is. I think it’s either just the way the report was written, or simply the nature of French banking and regulation. Anyhow, I think it’ll be interesting to see how Hermes’s bankers (BNP and BOA) defend it against this supposed takeover. It’s a pity that the small details of takeover defenses are rarely published in the papers!

Also, I took a look through the press releases and found one that left many things unsaid. I reproduce the full text here (but do e-mail me if you think I should take it off; I mean no ill-will):

Hermès has been informed that LVMH has acquired a 17 % stake in the Company.

In 1993, the shareholders of Hermès International, all descendants from Emile Hermès, decided to enlist the Company on the Paris stock exchange.

This decision was made with two objectives in mind :

* – support the long term development of the Company
* – make shares easier to trade for the shareholders.

Over the last 10 years, the Hermès group has delivered an average annual growth rate of 10 % of its net result and currently holds a very strong financial position with over M€ 700 of free cash.

Today, Hermès Family shareholders have a strong majority control of nearly ¾ of the shares. They are fully united around a common business vision. Their long term control of Hermès International is guaranteed by its financial status as limited partnership by shares and the family shareholders have confirmed that they are not contemplating any significant selling of shares.

The public listing of shares, allows investors who want to become minority shareholders to do so.

As a Family Company Hermès has treated and will always treat its shareholders with utmost respect.

The Executive Management,

Sunday October 24th, 2010

This entry was published on December 6, 2010 at 1:46 pm. It’s filed under Smart Things and tagged , , , , , , , , , , , , , , . Bookmark the permalink. Follow any comments here with the RSS feed for this post.

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