Hermès and LVMH have finally ended their lengthy legal battle over LVMH’s 23.2 per cent stake in Hermès. According to WWD, the fashion giants have agreed to a conciliation brokered by the Commercial Court of Paris.
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. Never a company to shy away from litigation, LVMH countersued Hermès, complaining of false allegations and blackmail.
Back in 2013 the AMF, the French financial regulator, 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 contested the accusation. Bernard Arnault, chairman and chief executive, instead claimed 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 could have come up with a better excuse than that! It wasn’t much of a surprise that this excuse didn’t hold much weight with the AMF. It ordered LVMH to pay 8 million Euros, the largest fine it has ever imposed.
The deal will see LVMH “distribute all its Hermès shares (approximately 6 billion Euros worth) to its shareholders, on the understanding that LVMH’s largest shareholder, Christian Dior will in turn distribute the Hermès shares it receives to its own shareholders.”
The deal brings an end to all litigation between the two parties.