The Arnault Family Group, Christian Dior and LVMH Moët Hennessy Louis Vuitton on Tuesday announced a twofold strategic deal to integrate the Christian Dior brand entirely within LVMH, a deal valued at some $13 billion by Business of Fashion's measure.
The deal entails a simplified public offer by the Arnault Family Group for Christian Dior shares that it doesn’t already currently hold, according to a press release. It’s a mixed offer consisting of €172 per share in cash and 0.192 Hermès International shares for each Christian Dior share, and would be completed by two secondary offers: €260 per share for each Christian Dior share and 0.566 Hermès shares for each Christian Dior share.
The move is aimed at strengthening LVMH’s Fashion & Leather Goods, according to LVMH chairman and CEO Bernard Arnault, through the acquisition of Christian Dior Couture from Christian Dior for an enterprise value of €6.5 billion.
Considering LVMH already owns Parfums Christian Dior, this deal makes a lot of sense, bringing Dior’s haute couture, leather, ready-to-wear apparel and shoes businesses into to the fold. LVMH previously shored up its high-fashion stance by unloading the more middle-of-the-road Donna Karan business in a sale to G-III Apparel Group, Ltd last year.
Earlier this month, the company reported quarterly earnings that beat expectations and signaled something of a comeback for luxury. Its first quarter revenue rose 15% to €9.9 billion. Organic revenue growth (with comparable structure and constant exchange rates) was 13% over the year-ago period. Positive growth was achieved in Asia, Europe and the U.S.
During the quarter, LVMH benefited from a favorable comparison base, particularly in Europe, where activity was affected last year by the impact of the November 2015 attacks in Paris. As a result, the company said the trend currently observed cannot reasonably be extrapolated for the full year. Still, investors warmed to the company’s prospects after that report, sending shares to a record high in Paris trading.
“This project represents an important milestone for the Group,” Arnault said in a statement about the Dior deal Tuesday. “The corresponding transactions will allow the simplification of the structures, long requested by the market, and the strengthening of LVMH’s Fashion & Leather Goods division thanks to the acquisition of Christian Dior Couture, one of the most iconic brands worldwide. They illustrate the commitment of my family group and emphasize its confidence in the long-term perspectives of LVMH and its brands.”