French luxury group LVMH, famous
for its silk scarves, handbags and champagne, is to take control of the Italian
family owned jewellery maker Bulgari at a time when the luxury market is
The Bulgari family has decided to
tender its 50.43 per cent stake in a share swap that will make it the
second-biggest family shareholder in LVMH.
The all-share deal brings together
Bulgari watches and jewellery with LVMH’s TAG Heuer, Zenith and Hublot brands.
The world’s largest luxury group,
which owns 50 brands ranging from Christian Dior perfume to Louis Vuitton bags
and Dom Pérignon, toasted a record 2010 recently.
The deal values Bulgari at $5.2
Evolution Securities analyst Simon
Hales said: “Financially then, the deal looks uninspiring for LVMH, but
strategically it is an excellent move, bulking LVMH up in watches and
jewellery, one of the fastest-growing areas of luxury.
With the luxury industry in strong
recovery mode, the financials will fall into place.”
The watches and jewellery division
is the fastest-growing of LVMH’s main business groups, but remains the
company’s smallest, with $1.3 billion in revenues, less than 5 per cent of
Bulgari, founded in 1884 by Sotirio
Bulgari, makes nearly half of its revenues from jewellery, and a fifth from
Bulgari’s chief executive Francesco
Trapani will join LVMH’s executive committee and head up the merged watches and
jewellery operations from the second half of 2011.
Under the deal, LVMH will issue
16.5 million new shares in exchange for the 152.5 million Bulgari shares held
by the Bulgari family and the French firm will submit a public offer of $17 a
share for the stock held by minority shareholders.