French luxury goods conglomerate LVMH Moet Hennessy Louis Vuitton offered Friday to buy all of Gucci Group in a sudden
change of course forced by a rival offer for the Italian fashion
LVMH's bid came after Gucci agreed earlier in the day to sell a
40 percent stake to French retailer Pinault-Printemps-Redoute for
LVMH said if Gucci scraps that deal, it will offer more than the
$75 per share offered by Pinault-Printemps. But LVMH declined to
reveal the price.
Financial analysts, however, estimated the offer is about $80 a
share, which would value Gucci at more than $4.6 billion.
A Gucci spokeswoman, who declined to be named, called LVMH's
takeover bid "a victory for Gucci," as LVMH is offering the price
that Gucci has been asking since LVMH began buying Gucci shares on
the stock market earlier this year. She also declined to name the
price LVMH has offered.
Gucci said its board would review LVMH's bid at a meeting Sunday
and decide whether to recommend it to shareholders over the offer
from Pinault-Printemps, whose chairman is Francois Pinault,
France's wealthiest financier.
"Gucci is the world's prime luxury brand and LVMH is obviously
willing to pay for it," said Jan Linderman, a director at the
London consulting firm Interbrand, Newell and Sorrell. "It is not
a cheap buy, but I think they can pull it off."
Pinault-Printemps' move for Gucci amounted to a slap in the face
for LVMH's chairman Bernard Arnault, who has spent the past month
wooing Gucci himself.
Gucci had argued until now that LVMH was attempting a "creeping
takeover," and demanded that LVMH either make a full bid or
provide legal guarantees limiting its influence.
LVMH had sought control of Gucci, but said it wasn't interested
in making a full takeover.
LVMH and Gucci have been locked in a fight for control for the
past month, following LVMH's $1.4 billion purchase of a 34.4
percent stake in the Italian company.
Analysts say that Gucci, which has staged a spectacular
turnaround over the past two years, has the potential for growth in
leather goods, watches and fashion items that could give LVMH a
LVMH on Thursday posted a 29 percent drop in 1998 net profit,
mainly because of weakness in Asia.
LVMH isn't limiting its horizons to Gucci, however. The United
States is an increasingly important market for the luxury goods
giant, which wants to counterbalance the effects of Asia's
Reflecting the new direction, the French group on Thursday
announced it has purchased a controlling stake in New York
cosmetics and spa company Bliss World, which makes and markets
skin-care and home-spa products under the Remede and Bliss brands,
and also bought a 24 percent stake in U.S. sportswear brand Gant
through its LV Capital investment fund.
LVMH owns a wide array of luxury brands including Louis Vuitton,
Christian Dior, Givenchy and champagne maker Veuve Cliquot.