LVMH's Arnault swoops to take full control of Christian Dior

Tue Apr 25, 2017 12:29pm EDT
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By Dominique Vidalon, Gilles Guillaume and Simon Jessop

PARIS (Reuters) - French billionaire Bernard Arnault will combine the Christian Dior fashion brand with his LVMH luxury goods empire as part of a 12 billion euro ($13 billion) move to simplify his business interests - a restructuring long demanded by other investors.

Under a series of complex transactions, LVMH (LVMH.PA: Quote), the world's largest luxury group, will buy the Christian Dior Couture brand from the Christian Dior (DIOR.PA: Quote) holding company for 6.5 billion euros, including debt.

The deal will unite the 70-year-old fashion label worn by film stars from Grace Kelly and Elizabeth Taylor to Jennifer Lawrence and Natalie Portman with the Christian Dior perfume and beauty business already owned by LVMH.

The Arnault family, which holds a 47 percent stake in LVMH, will also offer to buy the 25.9 percent of the Christian Dior holding company it does not already own for about 260 euros per share, a premium of 15 percent over Monday's closing price.

The transactions "will allow the simplification of the structures, long requested by the market, and the strengthening of LVMH's Fashion and Leather Goods division," the 68-year-old Arnault said in a statement.

Ronan Poupon, European equity portfolio manager at Natixis Asset Management, who holds LVMH shares, said the deal was good for both sets of shareholders, the Arnault family and LVMH, which adds a profitable luxury brand to its stable.

LVMH shares rose almost 5 percent to a record high of 225 euros as investors welcomed the deals, which they expect to boost LVMH earnings. Dior shares also jumped 13 percent to a new high of 256 euros.

"This is a good acquisition for LVMH in our view given the strong brand of Christian Dior, good use of its balance sheet and it reunites the Christian Dior brand with the very profitable perfume operation that LVMH operates," Barclays analysts wrote in a research note.   Continued...

Chairman and CEO of Luxury goods group LVMH Bernard Arnault attends a news conference, to announce a deal to simplify Christian Dior business structure, in Paris, France, April 25, 2017. REUTERS/Stephane Mahe