LVMH, the French luxury goods conglomerate, is to take a controlling stake in Bulgari, the Italian jewellery house, in an €3.7bn ($5.2bn) all-share deal.
The agreement, announced on Monday, will see the Bulgari family tender its 51 per cent share in a share swap that will make them the second largest family shareholder in LVMH, the world’s largest luxury goods group.
The deal strengthens LVMH’s competitiveness with Richemont, the Swiss luxury goods conglomerate, which boasts the Cartier brands and has traditionally been stronger in watches and jewellery.
A person close to the deal said that the Bulgari family, which includes brothers Paolo and Nicola, were united in their decision to agree to a share swap with Bernard Arnault, chairman and chief executive of LVMH.
Mr Paolo Bulgari, chairman of Bulgari, and Mr Nicola Bulgari, vice-chairman, said they had “found in Bernard Arnault and the group he has built all the elements that are required to guarantee the long-term future of Bulgari”.
Mr Arnault said the “alliance between my group and the Bulgari family is the perfect combination”.
“I am certain that our partnership will be greatly beneficial to Bulgari as well as to the LVMH Group”.
Bulgari was valued at about €2.3bn at Friday’s close, and the LVMH offer would put a premium of around 60 per cent on that figure. A tender offer for the remaining listed shares at a price of €12.25 per share will be launched on Monday.
The agreement will also see the Bulgari family getting two seats on the board of LVMH.
Francesco Trapani, Bulgari’s chief executive and nephew of Paolo and Nicola Bulgari, will also join the executive committee of the LVMH group and become head of LVMH’s watches and jewellery business which will double in size as a result of the deal.
Mr Arnault has made no secret over the past decade of his interest in adding Bulgari, one of the most illustrious jewellers and watchmakers, to a luxury goods conglomerate that includes fashion brands Louis Vuitton and Fendi and champagnes Dom Pérignon and Veuve Clicquot.
Analysts have been expecting a pick-up in deal activity in the luxury goods sector as companies seek to grow in order to tap surging demand from emerging markets.
Bulgari has long been considered one of the last great family-controlled luxury brands available to be taken over.
The deal contrasts with the situation at Hermès, where LVMH has built a shareholding of about 20 per cent in the group. The family members at Hermès, known for its leather handbags and silk scarves, have sought to fend off Mr Arnault, saying they do not view LVMH as a “desirable shareholder”.
Credit Suisse was the sole adviser to Bulgari on the deal. Calyon advised LVMH.
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