Hermes International SCA dropped the most in six months in Paris trading after LVMH Moet Hennessy Louis Vuitton SA last night denied it planned to bid for the shares of the Birkin bag maker that it doesn’t already own.
LVMH may be preparing to bid 350 euros ($505.79) a share for Paris-based Hermes, the Daily Mail reported yesterday, without saying where it got the information, sending the shares up as much as 4.6 percent. The stock fell as much as 11.40 euros, or 5.9 percent, to 180.55 euros today, the steepest drop since Dec. 3. It traded at 183.05 euros as of 10:23 a.m.
LVMH, which has accumulated a 20.2 percent stake in Hermes since October, has no intention of bidding for its rival, a company spokesman said last night, echoing comments made by LVMH Chairman and Chief Executive Officer Bernard Arnault, who has called LVMH’s investment “peaceful.”
“From the outset, we understood that there was no possibility of controlling Hermes because the family shareholders spoke for 70 percent of the company,” LVMH deputy chairman Pierre Gode said May 30 at Hermes’s shareholder meeting. “Our sole objective was, and remains, to make a long-term investment in a company with recognized potential and with which we share a passion for high-quality workmanship.”
Hermes’s founding family plans to retain control of the company and wants LVMH to reduce its stake by more than half to free shares on the open market, Bertrand Puech, who heads the family’s holding company, said in a February interview. Even if LVMH doesn’t reduce the holding, nothing will change regarding the running of Hermes, Puech said at the time.