Hermes Says It's in Discussions to Sell a 45% Stake in Jean-Paul Gaultier

Hermes International (RMS) SCA, the French maker of Birkin and Kelly bags, is in talks to sell its stake in the Jean-Paul Gaultier fashion house less than a year after the designer relinquished his role at the luxury-goods maker.

Hermes received “an expression of interest from potential buyers” of the 45 percent holding, the Paris-based company said today in a statement, without elaborating. PPR SA is one candidate that may study the sale of the stake, French daily Les Echos said today, without citing anyone.

Gaultier stepped down last year as the artistic director of Hermes’s women’s ready-to-wear unit after seven years in the role and was replaced by Christophe Lemaire. The designer has had a relationship with Hermes since 1999, when the company bought a 35 percent stake in his fashion house for $23 million. The stake was later raised.

Hermes may need to raise funds for expansion to help fend off LVMH Moet Hennessy Louis Vuitton SA (MC) after its rival acquired a 20 percent stake, according to Armando Branchini, vice- president of Milan-based consulting firm Intercorporate. Gaultier is seeking capital to develop and mandated Aforge Finance to study options, Les Echos said.

“Luxury companies are increasingly focusing on their core business,” Branchini said. “Also, because of the attack from LVMH, Hermes needs all the liquidity it can get for store openings and other investments.” The value of the business would be based mostly on the royalties from Gaultier perfumes, he added.

Valuations

Valuations of Gaultier’s fashion house vary from several dozens of millions of euros, according to unidentified possible buyers, to several hundred million euros, according to unidentified people close to the founder, Les Echos reported.

Hermes fell 5 cents to 154.65 euros at 10:45 a.m. in Paris trading. LVMH disclosed it held an Hermes stake in October. It built its holding without the knowledge of the company’s founding family, which controls more than 70 percent of Hermes. The family shareholders have bolstered their defense against a possible LVMH takeover.

Gaultier’s departure from Hermes marked the end of a formal arrangement that began when Jean-Louis Dumas, former president and chief executive officer of Hermes, signed the designer up to bring new blood to the maker of luxury handbags and silk ties. The French couturier is best known for designing the cone bra worn by singer Madonna on her 1990 Blond Ambition tour.

Charlotte Judet, a spokeswoman for PPR, didn’t immediately return calls seeking comment on the Les Echos report.

To contact the reporter on this story: Paul Jarvis in London at pjarvis@bloomberg.net

To contact the editor responsible for this story: Celeste Perri at cperri@bloomberg.net

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