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Economy: Richemont shares boosted by news of a Kering bid

Economy: Richemont shares boosted by news of a Kering bid

Swiss luxury group Richemont has seen its shares jump since Monday after a trade blog revealed that it had been approached by French luxury group Kering for a potential merger in January, but that the latter had rejected the offer.

 

Richemont’s share price rose by 4.1% in late morning trading, while Kering’s share price fell by 1.63%.

 

Indeed, fashion blog, Miss tweed, reported late on Sunday that a cash and stock merger proposal had been made directly by Kering CEO François-Henri Pinault to Richemont chairman and majority shareholder Johann Rupert.

 

According to the blog, Rupert did not submit the offer to the board of directors, as he was not satisfied with the conditions. It should be noted that in November he had already stated that he did not want to sell.

 

Representatives of Kering and Richemont declined to comment on the information.

 

Rumours of a possible merger between Richemont and Kering are not new and have been circulating for years. They gained momentum when LVMH’s acquisition of Tiffany put pressure on its rivals to expand.

 

“Kering stepped in just as LVMH completed its acquisition of US jeweller Tiffany & Co on 7 January. This transaction strengthened Bernard Arnault’s group and further eclipsed Richemont and Kering. LVMH has once again demonstrated that size is critical in the luxury industry, increasing the pressure on Richemont and Kering to come to an agreement,” according to the blog.

 

François-Henri Pinault simply replied that he was in “regular contact” last month, pointing out that Richemont, like Kering, was a family-controlled group.

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According to a UBS note on Monday, a deal between Kering and Richemont would create a luxury group that could compete with LVMH’s market dominance.

 

“The combination of the two soft and hard luxury mega-brands, Gucci and Cartier, could address Kering’s perceived higher fashion risk and the perceived mismanagement of Richemont’s smaller brands in its portfolio,” he said.

Read also > RICHEMONT : BETTER THAN EXPECTED QUARTERLY RESULTS

 

Featured Photo : © Richemont

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