LVMH buys 14.2 per cent stake in rival Hermès for €1.3bn

LVMH, the conglomerate behind Louis Vuitton, Dom Pérignon and Tag Heuer, has made a dramatic swoop on its French rival, Hermès.

The company, run by France's richest man, Bernard Arnault, yesterday finalised the €1.45bn (£1.3bn) purchase of a 14.2 per cent stake in the family business, taking its total stake to 17 per cent.

The deal brings together two of France's biggest fashion empires and underlines the resurgence of the luxury goods business, driven by demand from China and other booming Asian economies. Earlier this month, LVMH reported a 24 per cent increase in third-quarter sales, thanks to its Chinese shops. LVMH said its objective was to be a long-term Hermès shareholder and to "help the preservation of the family and French attributes, which are at the heart of the global success of this iconic brand".

The surprising move is likely to trigger questions about the intentions of Mr Arnault. LVMH sought to reassure Hermès and investors that it would not agitate for change. It said: "LVMH fully supports the strategy implemented by the founding family and the management team. LVMH has no intention of launching a tender offer, taking control of Hermès, nor seeking board representation."