Merger as a Response to LVMH — Tiffany Deal?
Richemont’s chairman and controlling stakeholder Johann Rupert was approached directly by Kering’s CEO, who proposed a cash-and-share business offer, according to a report in Reuters. Rupert did not accept Kering’s offer due to unsatisfactory business terms.
Rumors about the merger between Richemont, which owns luxury goods company Cartier and Kering, have been around for years now but have particularly been present in recent months after Louis Vuitton owner LVMH acquired US Tiffany last year.
Both Kering, which owns popular luxury fashion brands Gucci and Balenciaga, and Richemont are two of the most popular luxury goods business giants. Gucci owner Kering is more focused on fashion and leather goods, while Richemont’s main brand Cartier is known for jewelry.
The family ownership structure at both groups would present a major challenge for the merger in what would become the largest business deal ever in the luxury industry. At the moment, Kering’s market cap stands at roughly $88 billion compared to Richemont’s 47 billion Swiss francs ($50.8 billion).
Rupert’s family investment arm holds 10% of Richemont’s equity and 51% of voting rights as a result of a complex, dual-share scheme. On the other hand, 41% of the company owning Gucci fashion brand belongs to Artemis, a holding company owned by the Pinault family.
Shares of Richemont moved up 3.8% in the late morning, while the Kering stock dropped 1.4%.
The investment banking company UBS published a statement today saying that a merger between both companies would create a luxury business giant. This union would become a serious rival to LVMH as the Cartier brand would be added to the Kering family of popular brands, including Yves Saint Laurent, Gucci, Balenciaga, and others.
“Combining the two mega brands of the soft and hard luxury industry, Gucci and Cartier, could address the perceived higher fashion risk of Kering and the perception of mismanagement of Richemont’s smaller brands in its portfolio,” the bank said in a memo.
Separately, WWD reported recently that some private business investors and large companies, including Cartier owner Richemont, are reportedly interested in buying the Robert Talbott brand.
The company is reportedly up for sale as Hilco Streambank has decided to sell a business that has existed for over 70 years. The owner is seeking offers for the trademark, the brand’s name, and select inventory. Bidders can send offers until April 8.
“There are not many men’s wear brand with the cachet and exclusivity of Robert Talbott. The brand is uniquely positioned to appeal to discerning customers in multiple channels and categories seeking its casual yet sophisticated statement for today’s relax work and event needs,” said Richelle Kalnit, senior VP of Hilco.
The takeover of Talbott’s brand could significantly impact Richemont’s Peter Millar brand and shift its focus from furnishings toward high-end sportswear.
Shares of Cartier owner Richemont climbed today after reports that the luxury goods company rejected Kering’s bid for a potential merger in January due to unsatisfactory terms. The deal would see luxury fashion brands, such as Balenciaga, Gucci, and Cartier, operate within the same company.
About the Author
An analyst of global affairs, Adriaan has an MSC from Oxford, with diverse interests in the digital economy, entertainment, and business. He is a specialist trainer in advanced analytics and media.