Hermes International SCA finally reached an agreement with LVMH Moet Hennessy Louis Vuitton SA. The companies revealed that they settled their four-year dispute that began when LVMH started the accumulation of a large stake in its smaller competitor.
As the Wall Street Journal reported, the two companies explained: By virtue of the agreement reached today, LVMH and Hermès have brought to an end the conflict, and all related actions, between them.”
The companies revealed that LVMH, the worlds biggest luxury-goods maker, agreed to redistribute its stake in Hermes to its shareholders and institutional investors. Currently, the company holds a 23% stake in its smaller rival. The redistribution is to leave the owner of LVMH – Groupe Arnault with an 8.5% interest.
In addition, under the terms of the settlement, shares of Hermes wont be purchased by LVMH or any of its holding companies over the next five years. The two counterparts explained that the process is expected to be finalized by December 20th.
As reported by Bloomberg, LVMH said in a statement that Hermes Executive Chairman Axel Dumas and LVMHs owner Bernard Arnault “both express their satisfaction that relations between the two groups, representatives of France’s savoir-faire, have now been restored”.
According to the terms of the deal, the shareholders of LVMH will get one share in Hermes for every 21 shares in LVMH, which they currently own.
One of the analysts at Exane BNP Paribas – Luca Solca said in an e-mailed statement for Bloomberg that this agreement is “the end of the siege”. He also said that the resolution reduces “the speculative appeal of Hermes which goes back to being a normally traded company”.
Hermes International SCA lost 5.00% by 11:26 GMT to trade at €249.60 per share in Paris, marking a one year change of -2.56%. The company is valued at €27.74 billion. According to the Financial Times, the 15 analysts offering 12-month price targets for Hermes International SCA have a median target of €254.00, with a high estimate of €300.00 and a low estimate of €190.00. The median estimate represents a -3.33% decrease from the last price of €262.75.
LVMH Moet Hennessy Louis Vuitton SA rose by 2.56% to €136.45 per share, marking a one-year change of +1.15%. The company is valued at €67.64 billion.