LVMH to take control of Italy’s Bulgari: report

LVMH Moet Hennessy Louis Vuitton SA, the world’s largest maker of luxury goods, will take a controlling stake in Bulgari SpA, the Financial Times reported, citing an unidentified person close to the deal.

The Bulgari family will swap its 51 percent holding for a stake in LVMH in a deal to be announced Monday, the FT reported. LVMH will offer a “significant” premium to Bulgari’s market value of 2.3 billion euros ($3.2 billion) as of March 4, the newspaper said. A tender offer for the rest of Bulgari’s listed shares will also start Monday, the report said.

Brothers Paolo and Nicola Bulgari are among members of the Bulgari family who have agreed to the deal, the report said. The two each owned a stake of about 23 percent in the company as of Feb. 17, according to data compiled by Bloomberg.

Chief Executive Officer Bernard Arnault has built Paris- based LVMH into the world’s largest luxury-goods maker by snapping up brands from Donna Karan International Inc. to Glenmorangie Plc. LVMH holds 20 percent of Hermes International SCA after buying a stake in October without the knowledge of the company’s founding family, which controls more than 70 percent of Hermes. The founding family shareholders in the maker of Kelly handbags have bolstered their defense against a possible LVMH takeover.

Olivier Labesse, a spokesman for LVMH, and Paolo Piantella, a spokesman for Rome-based Bulgari, didn’t immediately return text messages and e-mails seeking comment outside regular business hours. 

The Italian jeweler fell 1.2 percent to 7.59 euros in March 4 trading in Milan, extending its drop this year to 6.1 percent. LVMH declined 1.2 percent to close at 111.55 euros in Paris.

LVMH, with about $3 billion in cash at the end of 2010, has announced at least eight acquisitions including the Hermes stake purchase in the past year, according to data compiled by Bloomberg. The company surged 28 percent in the past 12 months, beating the 2.8 percent gain of France’s CAC 40 Index.

Arnault’s Groupe Arnault SAS also holds 69 percent of Paris-based Christian Dior SA. LVMH bought Swiss watchmaker Hublot for an undisclosed price in 2008.

Bulgari, the world’s third-largest jeweler, traces its roots to the 1884 opening of a shop on Rome’s Via Sistina by Sotirio Bulgari, according to its website. The company has been listed on the Milan stock exchange since 1995 and has businesses ranging from hotels to silk scarves, in addition to watches and jewelry.

CEO Francesco Trapani would take a “senior role” at LVMH under the agreement, and the Bulgari family would get board representation, the FT reported. Trapani, a member of the family, has run Bulgari since 1984 and held 4.4 percent of its shares as of Feb. 17, according to data compiled by Bloomberg.

Bulgari said Jan. 26 its fourth-quarter revenue climbed 21 percent to 357.8 million euros, beating analyst estimates. The company, scheduled to report 2010 earnings on March 11, is introducing more lower-priced jewelry and high-end men’s watches as demand rebounds amid economic growth.

(Bloomberg)