Jun 5, 2013
Hermès descendant takes reins as co-CEO as rift with LVMH deepens
Jun 5, 2013
PARIS, France - Hermès International SCA has installed a member of its founding family as co-chief executive on Tuesday, as it fights rival luxury group LVMH's attempts to amass a stake in the company.
Axel Dumas, a sixth-generation descendant of the French company's founder, said in a statement he would seek to protect Hermès' "independence" alongside co-CEO Patrick Thomas, who is due to retire in 2014. Dumas gave few indications of the company's future strategy.
Hermès, the 175-year-old maker of Birkin and Kelly handbags, has eye-popping profit margins but downplays its commercial intent in favour of its artisanal history. Takeover rumours and strong performances have turned it into one of the most expensive stocks in Europe.
Hermès owners have fought tooth and nail against LVMH, the luxury vehicle of billionaire Bernard Arnault, since it revealed in 2010 that it had secretly built up a 14 percent stake in Hermès. The company, founded in Paris by Thierry Hermès as a harness workshop, has challenged the legality of the stealth stake-building in a court procedure and asked the regulator to intervene.
The battle spilled out into the public eye on Friday when market regulators said they would seek to slap LVMH with the maximum fine for failing to disclose its stealthy stake-building. LVMH, which holds 22.6 percent of Hermès, has consistently denied any wrongdoing.
Hermès has criticised the trades that allowed LVMH to build up its stake undetected, partly by using derivatives, and called for their annulment.
LVMH Vice-Chairman Pierre Gode hit back at these criticisms, saying in an interview with French newspaper Le Figaro that LVMH was a shareholder like any other and demanded to be treated as such.
"There is no legal foundation that would allow Hermès to obtain the annulment (of the LVMH stake-building trades)," Gode told Le Figaro. He added that LVMH had filed a lawsuit against Hermès following Dumas' criticisms, without saying on what grounds or what the specific allegations were.
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