Arnault gets upper hand in Gucci battle
Tuesday 23 March 1999
A court in Amsterdam last night partly blocked a deal between Mr Pinault and Gucci which was designed to undermine attempts by LVMH, the champagne- to-suitcases group run by Mr Arnault, to gain control of the company.
Gucci had stunned investors on Friday when it announced a deal to sell a 40 per cent stake in the company to Pinault-Printemps-Redoute, the retail group controlled by Mr Pinault, in return for a $3bn cash injection which valued Gucci at $75 a share.
The court yesterday blocked provisions of the deal which would have allowed PPR to appoint three new directors to Gucci's board, giving the French group control of a key strategic and financial committee. It also restored voting rights to LVMH's 34.4 per cent shareholding, which would have been diluted. However, the ruling gives a green light for PPR to take its shareholding in Gucci.
Gucci said yesterday it would "seriously consider" an offer for the company, pitched at $81 per share, which was tabled by LVMH on Sunday. The two companies are due to start negotiations on the proposed takeover in the next few days.
LVMH made the bid after Gucci's board rejected an earlier offer of $85 a share, which was conditional on the company abandoning its deal with PPR. Gucci said it could not accept the bid because it did not apply to all its shareholders.
Under the terms of the revised offer, LVMH is effectively offering to pay Mr Pinault $240m more for his stake than he agreed to pay for it on Friday. However, it is unclear whether Mr Pinault will walk away or decide to launch a full takeover bid himself.
The moves follow another twist in the battle for control of Gucci, which has dragged on for more than six months. In another dramatic day Domenico de Sole, Gucci's chief executive, and Pierre Gaudet, an LVMH board member, faced each other in a crowded courtroom in Amsterdam, where Gucci's shares are listed. Mr Gaudet told the court LVMH had been "shocked and disappointed" by Gucci's deal with PPR, which was announced on the morning that Gucci and LVMH had been due to start negotiating about board representation for the French group.
But Mr de Sole defended the move: "We have turned Gucci from a company that was almost bankrupt to a multi-billion dollar enterprise," he said.
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