PARIS (Reuters) - Hermes family shareholders won clearance on Thursday to pool their stakes without having to buy out other investors, boosting the French luxury group’s defense against rival LVMH.
A majority of Hermes family shareholders had decided last month to create a holding company to group more than 50 percent of the company’s equity as a defense against LMVH, which recently lifted its stake to 20 percent.
The holding, approved by French market watchdog AMF, is meant to discourage LVMH from attempting to acquire control of the maker of Birkin and Kelly handbags.
But the holding’s creation needed the AMF’s exemption from having to make a tender offer for other minority shareholdings, which would have been costly.
“It was already a fortress, this decision means that the walls have been heightened,” a business lawyer told Reuters, declining to be named.
Hermes shares closed down 1.9 percent at 155.05 euros, valuing the group at 16.33 billion euros ($21.5 billion).
However not all the around 70 family shareholders, descendents of the Puech, Dumas and Guerrand families who in total control around 73 percent of Hermes’s share capital, are part of the holding.
It was not clear how many family shareholders declined to give their shares to the holding. Hermes said the structure would have hold a combined stake of more than 50 percent of the company’s equity, but its exact size is not yet known.
Also, it is not yet known how family shareholders would be able to sell their shares with the new structure.
The AMF said it would publish soon an explanation of its decision.
Hermes family shareholders said in a statement: “This decision clears the way for our project to reclassify (our shares) which underscores the family’s unanimous will to preserve Hermes’s culture.”
The minority shareholders’ association ADAM said it would very likely appeal against the decision.
LVMH declined to comment.
(Writing by Astrid Wendlandt; Editing by Elaine Hardcastle and David Holmes)