AMF, the French financial regulator, has released a 115-page report confirming Hermès’ accusations against LVMH, that the luxury conglomerate had been quietly building its stake in the label for many years under different aliases. LVMH vigorously contest the accusation. Bernard Arnault, chairman and chief executive, instead claims that the group had ended up with the stake “in an unexpected manner”. You know how it is, you wake up one morning and find you ACCIDENTALLY own 22% of one of the world’s leading luxury brands. Come on Bernard, surely you can come up with a better excuse than that!
LVMH initially amassed a 17% stake in Hermès in 2010 and subsequently built the holding to 22% last year. LVMH reportedly accumulated the stake using equity swaps purchased from banks over a couple of years. Hermès claim that, in October 2010, LVMH amended the equity-swap contracts to obtain shares instead of cash allowing them to avoid rules that require companies to declare share purchases.
The two brands are currently in the middle of a lengthy legal battle over LVMH’s 22.6 per cent stake in Hermès. Hermès have accused LVMH of manipulating stock prices and unfair insider trading. Never a company to shy away from litigation, LVMH have countersued Hermès, complaining of false allegations and blackmail.
Following the release of the report, LVMH will appear before the AMF’s sanctions committee on May 31 to defend its actions. It insisted it would prove “the absence of any wrongdoing by LVMH towards the law and AMF rules”.
More to come on this one!