French economy minister Christine Lagard plans to change French laws so that sneaky stock purchases like LVMH’s surprise acquisition of a 17.1 percent stake in Hermès last month will be illegal. Under the existing laws, an investor must declare the acquisition of more than 5 percent of a company’s stock, but LVMH found a loophole because the rule doesn’t apply to cash-settled equity swaps, which the new law will cover. The modification could potentially be made in as soon as a few weeks; in the meantime, French officials are still probing LVMH to see if they can any other reasons the stock purchase could be deemed illegal.
Meanwhile, Hermès’s sales numbers are going through the roof: The company posted a jump of over 30 percent in revenues for the third quarter, which Hermès CEO Patrick Thomas attributed to a growing demand for fancy scarves, bags, and watches in Asia. Thomas also insisted that the company’s strategy would not be affected by LVMH’s stake in the company, adding that they’re still regarding the purchase as unfriendly to their interests. Sales are expected to grow 15 percent at constant exchange rates in 2010, which is an improvement over previous forecasts of 10-12 percent.
Hermès Sales Jump 30 Percent in Third Quarter [WWD]
LVMH’s Hermès Buy Could Result in New Rules [WWD]
Earlier: LVMH Will Be Formally Investigated for Sneakily Purchasing Hermès Stock
