Could LVMH potentially acquire RICHEMONT, soon?
Rumors have circulated that LVMH has attempted to indirectly pressure Richemont, potentially indicating the French luxury group's interest in taking over the Swiss company.
Despite already owning prominent jewelry brands such as Bulgari and Tiffany&Co, LVMH may be motivated to add Richemont's subsidiary, CARTIER, to its portfolio.
However, there are several hypotheses for why LVMH may be interested in acquiring the entire Richemont group rather than just CARTIER, including the potential for less regulatory hurdles and greater strategic value.
While a takeover of this magnitude could create a dominant player in the luxury industry, it remains to be seen whether the benefits outweigh the risks.
LVMH's last major acquisition was Tiffany&Co in 2021 for over $16 billion.
In February 2023, LVMH is valued at $314 billion while Richemont is valued at $66.3 billion.
It's possible that LVMH could acquire Richemont with a 30% premium without compromising its debt guidelines, potentially through a "merger of equals" using the same ratios for evaluation.
However, the division of voting rights between the two families owning each of the groups and the dilutive effects of a merger could be topics of debate.
Founded by South African businessman Johann Rupert in 1988, Richemont has been controlled by his family since its inception.
Rupert has been resistant to relinquishing control and refused to change the family-controlled boardroom structure in 2022.
Will the luxury industry see a game-changing acquisition in the future? Only time will tell if LVMH will pursue this path or seek alternative strategies for growth.
Learn more about this subject from this article: https://elegance-suisse.ch/lvmh-riche...
Feb 28, 2023 - Club de l'élégance
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