Battle to control Gucci thrown open after court intervention

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The Independent Online

The legal struggle between two French tycoons for control of the Gucci luxury goods group was thrown open once again yesterday by a judgment in the Dutch supreme court.

The legal struggle between two French tycoons for control of the Gucci luxury goods group was thrown open once again yesterday by a judgment in the Dutch supreme court.

LVMH, controlled by Bernard Arnault, appeared to have lost the battle earlier this year when a Dutch commercial court ruled that there was no reason to block an increase in Gucci's capital, granted exclusively to a company owned by his great rival, François Pinault.

Yesterday the Dutch supreme court quashed this ruling and ordered the commercial court to consider holding a full investigation into the agreement between Gucci and Mr Pinault's company, Pinault-Printemps-Redoute (PPR). Although Gucci originated in Italy, the company is registered in the Netherlands.

LVMH claimed victory and called for the cancellation of the deal struck last year which allowed PPR to increase its holdings in Gucci to a controlling 42 per cent. If the deal was cancelled, LVMH said, it would propose an alternative "which would allow [Gucci] to pursue its own strategy, remain entirely independent and protect the interests of its shareholders".

Gucci also claimed a victory of sorts. It said that the judges had rejected LVMH's request for an immediate cancellation of its arrangement with PPR.

The company, best known for its luxury leather goods, fought off a take-over by LVMH in March 1999 by giving Mr Pinault's company exclusive rights to an increase in its capital. LVMH claimed that this was an illegal manouevre.

The Amsterdam commercial court agreed there had been "management errors" in the handling of the capital issue but ruled that there was no need for a full investigation. It was this ruling which was overturned yesterday. The supreme court said that there was a contradiction between the finding of management "errors" and the rejection of an investigation. The commercial court must now either hold a full inquiry or offer new reasons for not doing so.

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