Hermes and owners have consistently fought with LVMH, the luxury vehicle and holding company of billionaire Bernard Arnault, since it revealed in 2010 that LVMH had secretly built up 14 percent stake in Hermes. The later increase to 22.6 percent, spurred additional concern for Hermes, who has launched a fresh round of legal proceedings against their now arch-rival LVMH.
Initially founded in Paris by Thierry Hermès as a harness workshop, Hermes has challenged the legality of the stealth stake-building in a court procedure. Last month, French stockmarket regulator AMF called for LVMH to receive the maximum fine for having failed to disclose moves to obtain cancellation of equity swaps LVMH used to amass stake in the 175-year-old maker of Birkin and Kelly handbags. The new and interesting move in the Parisian commercial court comes as a update to a similar complaint Hermes filed against LVMH in criminal courts in July 2012.
According to a spokeswoman for Hermes:
“The tribunal… will wait until the end of the penal investigation before launching its (new) procedure”
Hermes argues that LVMH had initial intentions of building up a stake in Hermes when it preemptively bought equity swaps in 2008. Furthermore, their complaint insists they should have informed the market of their initial intent upon acquiring the swaps which were supposed to be settled in cash, but were settled in Hermes shares instead.
The sanctions commission of the AMF is due to decide on LVMH’s fine by July 31.