LVMH Buys Minority Stakes in Christian Dior in $13.1 Deal

French billionaire Bernard Arnault and the LVMH Moët Hennessey Louis Vuitton luxury empire announced, on Tuesday, the completion of a minority stake purchase of Christian Dior in a buy worth more than $13 billion (USD). The seven decade old French luxury brand is just the latest fashion house to be scooped up by the world’s biggest luxury conglomerate who already owns other popular brands like Céline, Marc Jacobs, Givenchy, and Louis Vuitton.

As such, the group said that the largest shareholders of LVMH will be completing the purchase of 26 percent of Dior shares that it does not already own. This will be at a price of approximately $282 per share, in a deal that combines cash as well as shares in brands like Hermès, which is one company not owned by LVMH. The buy, then, will start with a new restructuring of the Christian Dior Couture and Parfums Christian Dior brands.
The company said, in a statement, “On the strength of its history and favorable prospects, Christian Dior Couture will be a source of growth for LVMH.”

Essentially, the transaction just simplifies the relationship between LVMH and Christian Dior as it buys out the remaining minority stakeholders.

The statement continues, “The development of Christian Dior Couture will be notably supported over the coming years by a new creative momentum and significant investments already completed, notably in America, China and Japan.”

In addition, LVMH chief executive Bernard Arnault comments, “This project represents an important milestone for the group. 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. They illustrate the commitment of my family group and emphasize its confidence in the long-term perspectives of LVMH and its brands.”

Analysts, of course, are praising this long-awaited sale. For example, Exaine BNP Paribas analyst Luca Solca says, “We see a number of positives. It adds a strong brand to the LVMH portfolio at a reasonable valuation and on an accretive basis and it reduces the risk of LVMH potentially buying ‘trophy assets’ [which will dilute capital returns].”

Finally, Diamant Bleu Gestion’s Danial Larrouturou comments, “The operation is being viewed positively by the markets,” as it will increase [theoretical] value of company shares.

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