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The long-awaited merger between LVMH and Christian Dior has arrived.
Billionaire Bernard Arnault is simplifying the complex corporate structure between his family holding company Groupe Arnault, Christian Dior and LVMH.
The family company is buying out the minority shareholders of Christian Dior for about €12.1bn.
The world’s largest luxury group by revenues said on Tuesday that the Arnault family will offer a mix of cash and shares it holds in Hermès that values Dior at €260 per share. This represents a 15 per cent premium to above the stock’s closing price on Monday.
Groupe Arnault will then sell the Dior Couture business to LVMH so the whole Dior brand is under one roof in the LVMH empire. Dior’s fragrance and cosmetics business is already integrated in the LVMH group. Groupe Arnault said Dior’s couture business had an enterprise value of €6.5bn.
Mr Arnault said is a statement: “The corresponding transactions will allow the simplification of the structures, long requested by the market, and the strengthening of LVMH’s fashion and leather goods division thanks to the acquisition of Christian Dior Couture, one of the most iconic brands worldwide.”
The luxury sector has rebounded following several years of pressure due to a slowdown in consumer spending and declining tourism in Europe after terrorist attacks. As a results, the price of other potential acquisition targets for LVMH has increased.
Analysts reacted positively to the deal. Luca Solca, head of luxury goods at Exane BNP Paribas said: “It adds a strong brand to the LVMH portfolio at a reasonable valuation and on an accretive basis. It reduces the risk of LVMH buying potential “trophy assets” at the expense of diluting its return on invested capital.”