THE FEUD between two of France’s top luxury houses boiled over yesterday after Hermes asked French prosecutors to open an inquiry into alleged insider trading and share manipulation by larger rival LVMH.
LVMH, led by billionaire businessman Bernard Arnault, has been increasing its holding in Hermes, the maker of €10,000 leather bags and silk scarves, since it surprised the market in 2010 by saying it had built up a 17 per cent stake.
The prosecutor’s office said yesterday that following a July complaint by Hermes, it had requested the opinion of French stock market watchdog AMF before deciding whether there was cause to open a possible criminal investigation, a spokeswoman for the Paris prosecutor’s office said.
Earlier yesterday Hermes had said that it had filed a complaint on July 10th over LVMH’s building a stake of over 20 per cent in Hermes without giving further details.
“It is the logical consequence of the questions raised by the terms of LVMH’s entry in the capital,” a spokeswoman for Hermes said.
LVMH, which owns 22.3 per cent in Hermes and has 16 per cent of the voting rights, hit back, saying it planned to file a complaint for “blackmail, slander and illegal competition”. IT said its initial stake-building was “perfectly regular”.
LVMH, which has always claimed the shareholding was friendly, acquired the Hermes shares through cash-equity swaps, which had not led to shareholding threshold declarations and whose use was investigated by the AMF in an inquiry in November 2010.
France’s AMF market watchdog declined to comment on the status of its inquiry or on the complaint filed by Hermes.
LVMH said it was awaiting the outcome of the AMF inquiry with “total serenity”, and that Hermes was trying to play the role of the bourse’s police without waiting for the outcome of the inquiry.
Hermes family shareholders have responded to the stakebuilding by creating a majority family holding that will shield it from the threat of a takeover.
Hermes shares were down 0.8 per cent at €228.4 in late afternoon trade, while LVMH shares were down 1.4 per cent at €128.2. – (Reuters)
