Luxury Giant LVMH Acquisition Of Dior Equity Exploration Behind Capital Routines

The luxury market has started to flourish as brand performance continues to rise, and at the same time a global market.

Group LVMH holder, French billionaire Bernard Arnott, raised the news that the $25.9% price of the remaining 25.9% stake in Dior has made the luxury market fast warming.

It is reported that, in addition, LVMH group plans to buy all the shares of Dior's advanced garment business for $7 billion 100 million.

Insiders pointed out that the two strong alliances will become a "cash cow" in the luxury goods industry and achieve strong absorption of gold.

It is worth mentioning that for the development of global luxury market, the industry should pay attention to capital market integration.

Acquisition equity

In April 26th, foreign media said Bernard Arnott, the head of the global luxury group LVMH group, offered a bid of 260 euros and 12 billion 100 million euros ($13 billion 200 million) per share to acquire another 25.9% stake in the luxury Dior, which will be traded through cash or Hermes shares.

At the same time, LVMH group also plans to buy 6 billion 500 million of the euro (about 7 billion 100 million U.S. dollars) to acquire Dior's high-end clothing business Christian Dior Couture's full stake.

By the end of March 2017, the paction value was 15.6 times that of Dior in the past 12 months, EBITDA (interest tax depreciation and amortization profit).

After the paction is completed, the Christian Dior Couture will be incorporated

Under the fashion and leather goods department, the biggest deal in the history of LVMH group will come into being.

Arnott said that through the acquisition, the company structure will be simplified and the LVMH group's fashion and leather products department strengthened, so as to simplify the shareholding structure of both sides and ensure the unity of Christian Dior Couture Dior brand.

It is understood that the Arnott family has already held 74.1% stake in Dior and 84.9% of the voting rights.

At the same time, Dior holds 100% of Christian Dior Couture and holds 41% of LVMH group.

After the completion of the paction, the Arnott family will hold a 100% stake in Dior, and the LVMH group will also directly hold 100% of the Christian Dior Couture Branch.

Insiders said that Arnott is also a major shareholder of Dior. Through this acquisition, he can pform his personal shareholdings into LVMH holdings.

This way can realize personal huge cash in order to raise Arnott's value and belong to normal capital market operation means.

Fast swallow

Related information shows that Arnott first mortgaged family assets in 1984 failed to buy Dior group, in 1985 he served as chairman and CEO of Dior board, and resurrected Dior with operational capability.

In 1987, in order to return LVMH's Dior perfume to its brand, Dior took advantage of the French stock crash and bought and controlled LVMH group at a low price.

It is worth mentioning that in the past 20 years, capital acquisition has become a must kill skill for LVMH group to open up territory, and the number of mergers and acquisitions is as high as 62.

Insiders say that LVMH is a very successful luxury group with five legs in capital market and brand operation, including the PPR group, RICHEMONT group, SWATCH group and PRADA group.

LVMH has also become a large-scale, fast growing development.

In October 2016, LVMH group announced the purchase of Germany's famous high-end luggage brand Rimowa 80% with 640 million euros.

Sales in Rimowa 2015 increased by 28.2% over the same period last year, reaching a record 350 million euros, and sales in 2016 are expected to exceed 400 million euros. In July 2016, LVMH announced that it would sell its brand name Donna Karan and its subsidiary brand DKNY to us apparel manufacturers for 650 million US dollars to clear up bad assets. In the same month, LVMH's investment company invested 50 million dollars in Korea's cosmetics company, Leo, and the high-end beauty market.

It can be seen that in the past year, LVMH group has acted frequently in the capital market, and its strategy is mature and its line is clear.

Zhou Ting, President of the Fortune Research Institute, said that the success of LVMH has benefited more from the successful operation of the group in the capital market.

It is precisely because of the good capital market in the early stage of LVMH that the brand concentration will reach a certain scale effect, so that it can build its own hegemony in the industry, and lay a solid foundation for the large-scale operation of the group.

Capital shuffle

According to the first quarter financial report of LVMH group in fiscal 2017, as of March 31, 2017, the group's revenue was 9 billion 900 million euros, up 15% over the same period last year.

Meanwhile, according to Dior 2017's first quarter earnings report, the group's revenue was 10 billion 400 million euros, an increase of 15% over the same period last year.

Both sales achieved strong growth.

Zhou Ting said that from the perspective of brand analysis, Dior entered the LVMH group and gained the support of the whole group in terms of brand value, product research and development, sales market, online channel sales and expanding customer channels. At the same time, the Arnott family spent all their resources and efforts in cultivating Dior during the years, and entered the group.

Dior will be incorporated into the development of collectivization and will become more standardized in the future.

For LVMH group, Dior sales performance is stable, at this time, Dior will return to their ranks, will also be more powerful.

From a macro point of view, the luxury industry should pay attention to capital market integration for the development of global luxury market. Meanwhile, for China's capital, it will have the opportunity to cut into the global luxury market through capital market operation.

In recent years, China's capital acquisition of luxury brands is common.

In April 2017, Tongling jewellery bought the Belgian Royal luxury jewelry brand Leysen1855; in January 2017, Gansu's acquisition of Italy by gang TAI HOLDINGS.

Buccellati; in April 2016, Ruyi group of Shandong bought the French light luxury fashion brand, and later bought the windbreaker luxury brand, such as AGIS.

"At present, the luxury industry is at a low ebb, but this stage is just a good time for luxury brands to use capital to return to the market."

Zhou Ting said.

For more information, please pay attention to the world clothing shoe and hat net information report.