LVMH Set to Take 98% Control of Bulgari

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Paris—As of Wednesday, September 28, LVMH will complete its 3.7 billion euro (about $5 billion) purchase of Italian jeweler Bulgari SpA.

“Taking into account the shares tendered to the offer, the shares already owned by LVMH and its controlled company Hannibal and those acquired by LVMH outside the scope of the offer, LVMH will hold 98.09% of the share capital of Bulgari,” LVMH said in a statement released Friday.

Unlike its tempestuous relationship with Hermès’ majority shareholders, descendents of the founding family, who instituted poison pill action against LVMH for taking shares in Hermès, Bulgari’s founding family members, also majority shareholders, were in agreement that LVMH’s purchase is in the best interest of the jewelry brand. In March, the Bulgari family traded its 50.4% stake in Bulgari for a 3.5% stake in LVMH.

Acquisition to Double LVMH’s Watch and Jewelry Business

Bulgari’s minority shareholders, which accounted for about 31.31%, received 12.25 euros (about $16.51) a share in cash, LVMH reported. In addition, LVMH has acquired about 0.77% of the share capital of Bulgari from open market transactions.

When the offer price for Bulgari is paid on Wednesday, ownership of the remaining shares will be transferred to LVMH.

The Bulgari acquisition is expected to double LVMH’s watch and jewelry business to about 10% of its total sales and about 6% of its operating profits, analysts predict.

LVMH’s purchase of Bulgari, one of the few remaining independent luxurygoods brands, has since fueled speculation that other similar independent brands, such as Burberry and Tiffany among others, may be takeover targets in coming months, too.

LVMH executives continue to believe that the macroeconomic uncertainty isn’t likely to effect its luxurygoods sales in the near future.

Speaking to reporters at a Louis Vuitton store opening in Singapore last week, Yves Carcelle, ceo of LVMH’s Louis Vuitton, said, “Even in period of crisis, people want to treat themselves. We don’t see any signs of slowing down whether it’s in Europe or inAmerica. The world of luxury doesn’t obey the same rule.”

Jordi Constans to Helm Louis Vuitton

Carcelle, who has guided Louis Vuitton’s global expansion since 1990, will become president of the “Foundation Louis Vuitton,” a Frank Gehry-designed museum slated to open in 2013. In the meantime, LVMH named Jordi Constans, former Danone SA executive, as the next LouisVuitton ceo to replace Carcelle. Constans will spend  a year of tutelage with Carcelle before assuming his new position.

Carcelle will remain a member of the LVMH executive committee and will undertake strategic roles alongside Bernard Arnault, chairman.

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