LVMH takes Gucci battle to court
Monday 22 March 1999
LVMH is applying to the courts in Amsterdam, where Gucci is listed, to overturn a deal Gucci cut with "white knight" Francis Pinault on Friday. Mr Pinault's giant French speciality retail group, Pinault-Printemps Redoute (PPR), paid $3bn (pounds 1.85bn) for 40 per cent of Gucci.
Bernard Arnault, head of LVMH, the world's largest luxury goods maker, says he will go to court to suspend Gucci's entire supervisory board and appoint an independent person to take charge of the company if his bid is not accepted.
Mr Arnault also wants to freeze Gucci's deal with PPR, which he claims dilutes existing shareholdings in Gucci and hands control to PPR without PPR paying a premium, against the interests of existing shareholders.
On Friday PPR agreed to pay $75 each for 39 million new Gucci shares. The deal was 7 per cent above the market price, and diluted LVMH's holding in Gucci to 22 per cent from 34.4 per cent.
LVMH responded on Friday by saying it would top PPR's bid. It is thought LVMH's offer is worth around $85 a share.
Gucci's supervisory board met in Amsterdam yesterday to discuss the bid battle. It had dismissed LVMH's approaches before last week, but analysts suspect it may change its tune now Mr Arnault has been forced into a full bid.
In particular, if Gucci accepts the bid it will trigger "golden parachutes" worth up to $100m for Gucci's top people. The company's chief executive, Domenico De Sole, and his chief designer Tom Ford are set to receive at least $20m each, say industry sources, although under Italian law their contracts are shrouded in secrecy.
The prize is a juicy one. Gucci's profits rose by 62 per cent in the fourth quarter of last year. Gucci refused to comment on the battle last night.
A spokesman for LVMH said Gucci had no choice but to accept its bid, as it represented "by far the best option for shareholders. Friday's deal gives PPR control with no premium to shareholders, and it was done without consulting shareholders".
Mr Arnault has said before that he is "sure'' his bid to buy all of Gucci will succeed because the price he is offering is "exactly the amount asked for by De Sole when we discussed the hypothesis,'' according to the Italian business newspaper Il Sole/24 Ore.
LVMH said its offer only stands if new Gucci shares that have been issued to PPR are cancelled. LVMH also said its offer hinges on Mr Pinault abandoning plans to transfer his Sanofi beauty unit to Gucci.
For Gucci, the PPR alliance provides the cash to pay for its expansion plans and a partner that it does not regard as a competitor.
Emergency call 'started off dumb, but got pretty serious'
- 1 This 'woman calls police to order pizza' story isn't going where you're expecting
- 2 Watch what happened when food critics were unknowingly served McDonald's
- 3 Jimmy Carr's controversial Oscar Pistorius joke goes a bit too far at the Q Awards
- 4 Ottawa shootings: Bruce MacKinnon's cartoon is the perfect tribute to soldier Nathan Cirillo
- 5 Of course, teenage girls need role models – but not like beauty vlogger Zoella
Isis releases first video showing the stoning of woman accused of committing adultery as her father shouts 'don't call me Dad'
FCKH8: Provocative anti-sexism video showing young girls swearing reinstated by YouTube
Diwali: What is the festival of lights – and how is it celebrated around the world?
Jimmy Carr's controversial Oscar Pistorius joke goes a bit too far at the Q Awards
Ottawa shootings: Bruce MacKinnon's cartoon is the perfect tribute to soldier Nathan Cirillo
Of course, teenage girls need role models – but not like beauty vlogger Zoella
Cameron is warned 'no possibility' of UK reducing immigration and that bid to bring in quota on migrant workers would be illegal
Support for EU membership 'at highest level since 1991' with most Brits wanting to stay 'in'
Thousands with degenerative conditions classified as 'fit to work in future' – despite no possibility of improvement
Residents should throw a street party and mix with immigrant neighbours, councils told
London bus driver 'kicks gay couple off for kissing'
iJobs Money & Business
£50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...
£350 - £360 per day: Ashdown Group: SQL Developer with T-SQL, Watford, Hertfor...
120-150k: Accountancy Action: We are looking for an experienced CFO from a min...
£24000 - £28000 per annum + bonus & benefits: Ashdown Group: IT Business Syste...