In its long-running contentious battle with Hermès over the stake LVMH built up starting in 2010, LVMH was levied with an 8 million euro fine (about $10.6 million) by The Autorite des Marches Financiers (AMF), the French stock market regulator, for failing to disclose its equity swamps that eventually amounted to its 23.1% stake in Hermès.
Hermès’ majority shareholders, mostly members of the company’s founding families, have been fighting LVMH over the stake which it considers hostile.
While LVMH had called the AMF ruling “weak” and “totally erroneous,” today the luxurygoods giant acknowledged it would not continue to appeal the June decision by the AMF’s disciplinary commission.
Appeal Would Interfere with ‘Sound Management of LVMH’s Investment’
“This decision reflects LVMH’s commitment to ensuring the soundest possible management of its investment in Hermès,” stated LVMH in a statement today. LVMH maintains its stake in Hermes is a friendly one, a mere investment not a takeover attempt.
But LVMH maintained its agreement with two of three banks involved in the swaps was not actually confirmed until October 2010. “As promptly remarked by eminent observers, the AMF disciplinary commission’s position is therefore highly questionable, both in law and in fact.”
“As a result, LVMH would be entirely justified in appealing the disciplinary commission’s administrative decision, as envisaged at the time it was announced. However, the interests of LVMH’s shareholders go beyond the defense of these legal principles. Instead, LVMH must also consider the time and cost of further proceedings and the fact that such proceedings would interfere with the sound management of LVMH’s investment in Hermès.”
While paying the fine to the AMF may end some of investigation into the swaps, LVMH still faces multiple lawsuits Hermès has initiated against it. LVMH responded with its own complaint Hermès against for slander and false accusations.
“LVMH will take all necessary action to end the baseless legal proceedings being pursued by Hermès management and to recover compensation for the serious harm their actions have caused,” the parent to Louis Vuitton, Christian Dior, Bulgari and other luxury brands, added.