Hermès has won a major victory over LVMH today after a French appeals court crushed the luxury giant’s chances for a takeover.
The decision paves the way for Hermès International SCA’s family shareholders to create a holding company that will control more than 50% of the company’s shares, blocking a takeover offer for the rest of the group.
In October rival LVMH raised its stake in Hermès by 5% and had expressed interest in buying more shares.
Speculation of a possible LVMH bid have sent Hermès share prices soaring since January, far exceeding the company’s expected earnings for the year.
Hermès family shareholders released a statement saying the holding company, which is expected to be created by the end of the year, “will durably strengthen the independence of the Hermès group” in the next few weeks.
Past events suggest French minority shareholder’s association, ADAM, may appeal the ruling. Earlier this year, the association lodged a complaint after French market watchdog AMF exempted Hermès from having to buy out minority investors providing it established a controlling family holding. The court upheld AMF’s decision.
Stock at Hermès group, which is valued at about £25 billion (€28 billion), closed 3.6% up on Wednesday ahead of a suspension on Thursday’s pending the ruling. Trading will resume on Friday.
LVMH declined to comment on today’s ruling.