Account LVMH to Take Control of

Christian Dior in $13.1 Billion

Deal
 Bernard Arnault, chairman and chief executive of LVMH Moët Hennessy Louis Vuitton, at a
news conference in Paris on Tuesday. LVMH already owned Parfums Christian Dior; it will
now take ownership of the brand’s clothing, leather and shoes businesses. Geoffroy Van Der
Hasselt/Agence France-Presse — Getty Images

By Elizabeth Paton

April 25, 2017

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LONDON — The LVMH Moët Hennessy Louis Vuitton luxury empire and
the French billionaire Bernard Arnault announced on Tuesday a series of
moves to take over Christian Dior in a $13.1 billion deal to consolidate
control over the 70-year-old Parisian fashion house.

The transaction would simplify LVMH’s relationship with Christian Dior by

buying out minority shareholders. LVMH, the world’s biggest luxury group
by revenue, already owns Parfums Christian Dior, and the deal would give
it ownership of the Christian Dior haute couture, leather, men’s and
women’s ready-to-wear, and shoe businesses.

As part of the proposal, one of the largest for the luxury goods
conglomerate, the Arnault family offered to buy the 25.9 percent of Dior it
does not already own. The family would hand over a mix of cash and
Hermès shares, valuing Dior at 260 euros, or $282, a share, LVMH said.
That represented a 15 percent premium over the closing price on Monday.

The LVMH fashion and leather goods division would then buy Christian
Dior Couture for an enterprise value of €6.5 billion.
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 “The corresponding transactions will allow the simplification of the
structures, long requested by the market, and the strengthening of LVMH’s
fashion and leather goods division,” Mr. Arnault said in a statement. He
added that the deal “illustrated the commitment of my family group and
emphasizes its confidence” in LVMH’s long-term prospects.

Mr. Arnault laid his first claim to Christian Dior in 1984, when he bought
Boussac, a textile group that included the Parisian fashion house and that
was in bankruptcy protection at the time. Christian Dior soon became the
cornerstone of Mr. Arnault’s luxury empire.

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But the company was part of a complicated holding structure, making Dior
a “sister” fashion brand to the many labels that Mr. Arnault bought via
LVMH, including Berluti, Givenchy and Loro Piana. From the outside,
however, Dior seemed to be part of the same family.

The Arnault family owns a 47 percent stake in LVMH, whose brands also
include Céline and Fendi. The boards of Christian Dior and LVMH are
unanimously in favor of the deals, the statement said, and they have
appointed independent experts to review the terms.

LVMH’s offer to take over the Dior couture division will simplify ownership
to an extent, but not entirely. The company called Christian Dior, which
owns the brand’s couture business, will continue to exist and will own 41
percent of the share capital in LVMH, plus 56.8 percent of voting rights,
making it the conglomerate’s controlling shareholder.
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LVMH continues to outperform the wider luxury market, which has

faltered in recent years in the face of fears of geopolitical conflict and
currency fluctuations. Last month, rebounding demand for luxury goods in
China and Europe pushed its first-quarter sales to €9.88 billion, a 15
percent increase over the same period a year earlier and far beyond
estimates.

Analysts reacted positively to news of the deal with Christian Dior, which
had long been expected by industry observers. The transaction is expected
 to close in the second half of this year, and it is projected to increase
LVMH’s earnings per share within the first year of its completion,
according to the statement announcing the agreement.

“The deal adds a strong brand to the LVMH portfolio at a reasonable

valuation,” Luca Solca, managing director of luxury goods at Exane BNP
Paribas, wrote in a note to investors.

Over the past five years, revenue at Christian Dior has doubled and
profitability has improved. The brand named its first female creative
director, Maria Grazia Chiuri, to much excitement last June. Though her
collections have been met with lukewarm reviews, the brand reported
revenue in excess of €2 billion and profit from recurring operations of €270
million for the 12 months ended March 31.

The Arnaults’ decision to offload Hermès shares comes nearly three years
after the family received stock in the Paris-based luxury leather goods
house after an effort by LVMH to build a stake in the company.

Follow Elizabeth Paton on Twitter @LizziePaton.

Vanessa Friedman contributed reporting from New York.

A version of this article appears in print on April 26, 2017, Section B, Page 5 of the New York edition with the headline:
LVMH to Solidify Control of Christian Dior in $13 Billion Plan. Order Reprints | Today’s Paper | Subscribe

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