Arnault's LVMH to buy Christian Dior for $13 billion

LVMH rose as much as 3.4% in early trading in Paris, while Dior gained as much as 13%

French billionaire Bernard Arnault moved to consolidate control over Christian Dior for about 12.1 billion euros ($13.2 billion), folding the fashion house’s operations into the LVMH luxury empire in one of his biggest transactions.

The deal unites ownership of one of the most iconic fashion brands under one roof for the first time in decades, valuing Paris-based Christian Dior at 260 euros a share, according to a statement on Tuesday. That’s 15 per cent above the Monday closing price of Dior, which Arnault’s family already controls with a 74 per cent stake.

The two-part transaction, which comes amid a China-led revival in the luxury-goods industry’s fortunes, simplifies a complicated ownership structure and crowns the career of the biggest consolidator in the business. Arnault, who has a net worth of $46.3 billion, took control of the parent companies of Dior and Louis Vuitton in the 1980s and later added brands ranging from fashion label Fendi to jeweller Bulgari and suitcase maker Rimowa.

In the latest deal, LVMH is taking over a fashion house whose voluminous “New Look” helped revive French haute couture in the postwar years and whose designers have ranged from Pierre Cardin to John Galliano, for 6.5 billion euros. LVMH, 47 per cent controlled by the Arnault family, already owns Dior perfumes and beauty thanks to a 1960s-era transaction to raise capital for the then-troubled fashion brand.

“Reuniting Christian Dior Couture and Christian Dior Parfums, so one brand under one leadership, has to be a good thing for LVMH shareholders,” Stephen Mitchell, head of strategy for global equities at Jupiter Asset Management, said in a Bloomberg Radio interview. “It does clean up the corporate structure.”

LVMH rose as much as 3.4 per cent in early trading in Paris, while Dior gained as much as 13 per cent.

Dior investors can choose payment in cash or stock of Hermes International, using shares in the rival Paris-based luxury company that the Arnault family received in 2014 after a controversial effort by LVMH to build a stake. The boards of Christian Dior and LVMH are unanimously in favour of the deals, and have appointed independent experts to review their terms, according to the statement.