UPDATE 2-S.T. Dupont to make pens for Louis Vuitton -sources

Wed Nov 21, 2012 12:27pm EST

* First pens to go on sale in mid-December - sources

* Companies decline to comment

* S.T. Dupont shares rise more than 26 pct

By Astrid Wendlandt

PARIS, Nov 21 (Reuters) - French luxury pen maker S.T. Dupont is to supply Louis Vuitton as part of the French fashion brand's return to the stationery business to be unveiled in mid-December, sources close to the matter said.

The deal between Louis Vuitton and the 140-year-old maker of high-end lighters and pens " i s quite sizeable in terms of revenue" for S.T. Dupont, a source close to the company, who declined to be named, told Reuters.

S.T. Dupont's shares rose more than 26 percent following the report of the agreement between the two companies.

The transaction means that Louis Vuitton, owned by LVMH , the world's biggest luxury group, will effectively take on Montblanc, part of Swiss company Richemont, in the market for high-end writing instruments.

Both Louis Vuitton and S.T. Dupont declined to comment.

S.T. Dupont makes lacquered black pens and square-shaped cigarette lighters in a factory in the French Alps. It has also launched a collection of bags, pens and lighters based on actors Humphrey Bogart and Audrey Hepburn, who owned S.T. Dupont products.

The company, controlled through a 70 percent stake by Asian retail tycoon Dickson Poon, will supply Louis Vuitton with a wide variety of writing instruments, including high-tech fountain pens that will function in pressurised aircraft cabins without leaking.

Louis Vuitton, known mainly for its LV-embossed handbags, has already been expanding its luxury brand into other product areas. The company branched out into ready-to-wear fashion with designer Marc Jacobs in 1997 and later into watches and jewellery.

Earlier this year, it poached Jacques Cavallier-Belletrud from fragrance producer Firmenich, creator of perfumes for luxury brands such as Yves Saint Laurent and Issey Miyake, to invent a fragrance for Louis Vuitton.

"It makes sense for LVMH to develop Louis Vuitton into more categories," Luca Solca, analyst at Exane BNP Paribas said. "Louis Vuitton is one of the most prominent brands in the world, and when you look at its category breadth you find material opportunities for extensions."

Louis Vuitton, which made pens in the mid-1990s but phased them out, has big ambitions for its new collection, which will include alligator-skin fountain pens, customised stationery, bright inks, writing pads and Baccarat crystal ink wells.

Its plans were first reported by Reuters last month.

Once the pens go on sale in Paris, Louis Vuitton hopes to open shops dedicated to stationery and writing instruments in New York and Tokyo, sources close to the brand said.

"The key will be finding the right spot in those two cities," one source said. "It is not that easy."

In Paris, Louis Vuitton will sell its new pens and stationery in a boutique tucked away in a side street next to its new premises on Boulevard Saint-Germain where it has begun hosting exhibitions and conferences dedicated to writing and travel.