Will LVMH Have To Pay $13 Million For Buying Up Hermès Stock?
Slander, blackmail, insider trading — the accusations lobbied in the war between LVMH Louis Vuitton Moët Hennessy and Hermès read like plot points in a particularly juicy Wall Street TV drama. Now there’s one more cliffhanger being thrown into the mix: LVMH may have to fork over 10 million euros for failing to disclose their intent to amass what was, as of December 31, a 22.6 percent stake in their rival company. Gulp.
WWD reports that France’s stock market watchdog, the Autorité des Marchés Financiers, recommended the hefty fine — $12.99 million at current exchange — during a hearing on Friday. Representatives from LVMH staunchly defended themselves against accusations that they began covertly obtaining shares of Hermès as far back as 2001, and no later than June 21, 2010, despite not officially announcing the sizable stake they had amassed until October 21, 2010. Furthermore, vice president Pierre Godé objected to the idea that they might ever have planned a hostile takeover, pointing out that, “Hermès is a company that is particularly well protected [due to its shareholder structure]. We could have no hope of exercising any influence….It would be crazy to attempt a takeover bid on Hermès.”
But that doesn’t change the fact that they surprised everyone (Hermès included) with their announcement — nor, we imagine, does it change how distinctly unhappy the Birkin purveyors are with the encroachment of the bigwigs. The Dumas, Puech, and Guerrand families, who together own more than 70 percent of the company’s stock, formed a holding company together to prevent LVMH from breaching their walls and according to Godé, one of their executives “has been waging a campaign of denigration and slander against LVMH that is extremely detrimental to LVMH’s image and reputation.”
But it’s more than reputation on the line now, since in the coming weeks the AMF’s board will have to determine whether LVMH broke the law by failing to disclose their trades, which were done in such a way as to bypass standard regulations. If they decide the behemoth violated a sanction, the maximum fine possible at the time will be imposed. But as staggering as 10 million euro might seem, LVMH may actually be better off than if the events had transpired, say, last week, since the cap has been raised to 100 million euros, or $129 million, since 2010.
The paper reports that the enforcement committee will announce its ruling sometime before July 31…but, um, isn’t this all happening in France? Of the infamous three-month summer holidays? We wouldn’t be surprised if they have their decision tomorrow so they can jet off to their summer in Nice.