Luxury group Kering made an informal offer in January to merge with rival luxury conglomerate Richemont, in an effort to create a “sizable challenger” to high-end behemoth LVMH, according to French online publication Miss Tweed.
But the cash-and-shares proposal—made directly by Kering CEO François-Henri Pinault to Richemont chairman Johann Rupert—was quickly shot down, the publication said, quoting informed sources. Rupert was not happy with the terms and did not even submit the proposal to the company’s board, it said.
A Richemont spokesperson said the company “declines to comment on media or market speculation.”
In November 2020, Rupert told analysts on a conference call: “We have so often spoken about these so-called transformational deals. [None] are on the horizon.”
Kering did not return a request for comment by the time of publication.
A Richemont-Kering combination would be a force to be reckoned with in the luxury sector, and might represent the biggest merger ever in that space.
Richemont is a big player in the jewelry and watch business, owning Cartier, Van Cleef & Arpels, IWC, Vacheron Constantin, Montblanc, Net-a-Porter, and Jaeger-LeCoultre. Kering’s staple of brands includes Gucci, Yves Saint Laurent, Bottega Veneta, Alexander McQueen, Ulysse Nardin, and Girard-Perregaux.
“Combining the two mega brands of the soft and hard luxury industry, Gucci and Cartier, could address the perceived higher fashion risk of Kering and the perception of mismanagement of Richemont’s smaller brands in its portfolio,” said UBS, in a note quoted by Reuters.
However, the news service added that “while combining the two would make sense strategically, the family ownership structure at both companies is a big hurdle.” It noted that Rupert’s family investment vehicle controls 51% of Richemont’s voting rights, while the Pinault family’s holding company, Artemis, owns 41% of Kering.
Asked about the rumors last month, Pinault said that Richemont is “a group that we know well, it’s one of our partners that gave us a license for their eyewear so we are in regular contact. But it’s a group that is controlled by a family, as is Kering, and there is nothing else on this matter.”
Speculation about a possible merger has increased in light of LVMH’s January purchase of Tiffany & Co.
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