Pret-a-Reporter

LVMH Buys Christian Dior Couture for $13 Billion

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Dior's fall 2017 collection at Paris Fashion Week

The Arnault family continues to build its luxury empire.

The French magnate behind LVMH moved to incorporate Christian Dior into his luxury goods empire in a 12 billion-euro ($13 billion) deal.

It's the latest business coup for Bernard Arnault, who has expanded LVMH to include dozens of leading luxury brands — from high-end champagne and whiskies to exclusive Louis Vuitton handbags, Hermes, Kenzo and Givenchy perfumes, and Bulgari and TAG Heuer watches.

Under the terms of the deal, which is intended to simplify complex ownership structures, Groupe Arnault, primarily an investment firm, in June will make a cash-and-share offer for the minority of Christian Dior shares it doesn't currently own. The deal values Dior at 260 euros per share.

After that, LVMH, which is also controlled by Arnault, will take control of the Christian Dior Couture high-end fashion house business for 6.5 billion euros ($7.1 billion).

Shares in both Christian Dior and LVMH Moet Hennessy-Louis Vuitton rose after the announcement of the long-awaited deal. Dior shares spiked 11.7 percent to 253.45 euros by mid-afternoon Tuesday, while LVMH shares were up 4.2 percent at 223.65 euros.

The hope is that combining Dior's brands under one roof and simplifying internal activities will generate savings.

Insisting that there would not be a major upheaval, LVMH CFO Jean-Jacques Guiony said the Arnault family "decided it would make sense to invest 12 billion euros of their private money" into further consolidating their holdings.

"That's a major decision and major commitment, and proof of faith and confidence for the future," he said.

The companies laid out their hope that Dior's fashion revenues and profit, which have risen in recent years, will be a "source of growth" for LVMH, particularly with development in the U.S., China and Japan. Since becoming Dior's head designer last year — the first woman to hold the job in its 70-year history — Maria Grazia Chiurri has sought to explore gender boundaries and rework the Dior aesthetic.

The proposed deal will still need regulatory approval and consultations with workers. The hope is that it will be completed in the second half of this year.

 

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