Le Monde revealed yesterday on May 18, 2013 that a confidential 115-page report they were able to consult shows that luxury group LVMH had been secretly preparing their takeover of Hermès over a period of 12 years through the setting-up of complex financial pathways meant to camouflage their underground tunnelling effort.The French authority on financial markets, l'Autorité des marchés boursiers (AMF) have come up with the conclusion that the evidence presented them means that LVMH were slowly building up a takeover momentum rather than it be the unpredictable result of unrelated financial operations as Bernard Arnault affirmed as recently as on April 18, 2013 to the General Assembly of his group...
LVMH will have to defend themselves against the two main accusations of "dissimulation to the market" and "lack of sincerity in their accounting".
Key events started taking place in 2001 and 2002 with the purchase of 4,9% of Hermès via two LVMH foreign branches, Hannibal in Luxemburg and Altaïr in the United States, in the Delaware, the latter which afterwards sent their stakes to to three different companies in Panama: Ashburry Finances, Bratton Direction and Ivelford Business.
Nicole Vulser who writes the article details the many layers of secrecy and behind-the-scenes comploting that the report by Sophie Baranger and Laurent Cambourieu has been able to trace back to. One is struck by the level of aggressivity and focus displayed by LVMH who started implementing a minutious takeover plan devised with the help of Rothschild & Compagnie and lawyers Bredin-Prat from December 2006 after the news that Hermès head Jean-Louis Dumas had to step down due to an incurable illness. A month after his death in June 2010, LVMH who had thus far relied on an equity swaps system dispersed through three banks, decided then not to cash them but to be repaid in Hermès stocks, a move approved by Lazard bank. On October 21, 2010 LVMH administrators were informed that LVMH had had Hermès stocks in their possession since 2001. On October 23, 2010, the news are made public conveying the flavor of a capitalist putsch the more so since both brands are very well known from the larger public and have very distinct images, with the percentage in stakes continuing to climb within a few days from 14,2 % to 17,1%. Today LVMH own 22,3 % of the Hermès stakes claiming to have reached this figure legally although a number of regulations were not observed by them to attain this current goal, in particular rules to have to publicize new capital thresholds set either by Hermès at 0,5% or at 5%, 10% and 15% by the financial authorities.
On May 31, 2013, a sanctions commission of the AMF will examine the arguments presented by the defense of LVMH.
Read more at Le plan très secret de LVMH pour entrer chez Hermès; Le Figaro report also on the new turn of events, LVMH préparait bien une prise de contrôle d'Hermès