In a surprisingly drama-free arrangement, LVMH has taken control of Bulgari and the Bulgari family has become a major stakeholder in LVMH. The whole thing sort of reminds us of an elementary school lunchtime transaction (I’ll trade you my chips for your Oreos!), and we mean that in a good way.
According to WWD, LVMH issued Bulgari 16.5 million shares of LVMH stock in exchange for the family’s 152.5 million shares of Bulgari. Lest this sound unfair, you need to realize that this makes the Bulgaris LVMH’s second largest family shareholder after the Arnaults. Also, Bulgari CEO Frances Trapani gets to join LVMH’s executive committee and run their watch and jewelry division, and the family is allowed to appoint two representatives to the conglomerate’s board of directors. No changes are being made to the Bulgari board.
For the number-inclined:
The French luxury conglomerate agreed to purchase the Bulgari family’s 50.4 percent stake for 1.86 billion euros, or $2.6 billion at current exchange, in stock and will make a tender offer for the rest at 12.25 euros, or $17.12 per share, at a 59.4 percent premium on the closing price of Bulgari shares on March 3. The Rome-based firm will be delisted upon completion of the offer.
Anyway! Both Trapani and Bernard Arnault sound pretty happy about the outcome, with Trapani citing this as an opportunity for Bulgari to grow and Arnault saying: “The alliance between my group and the Bulgari family is a perfect combination from all points of view, as we share the same culture in terms of respect for identity and roots of the brands, quest for excellence, creativity and innovation.”
Of course, LVMH’s takeover of Hermès continues to be far more hostile. While the Bulgari family seeks to use the LVMH connection as a means of furthering their brand, the Hermès family wants nothing to do with Arnault and co. Need proof? Hermès CEO Patrick Thomas had this to say: “If you want to seduce a beautiful woman, you don’t start by raping her from behind.” Now those are some fighting words.
Hermès experienced a net income increase of 46% in 2010, and Thomas speculated that delisting would be a good choice for the company, though no internal discussions about such a move have occurred. Thomas also made it clear he believes LVMH may not have declared all of its shares in the company, and that the Hermès family is as united as ever. Oh, also this: “Today, there is no interaction between LVMH and us. We don’t plan to have any.”