Gucci Mulls Bid From LVMH in Takeover Battle

Italy’s Gucci Group said Monday it would seriously consider rival LVMH’s takeover bid of $81 a share, as LVMH went to court in Amsterdam to block a deal between Gucci and Pinault-Printemps-Redoute.

Gucci on Friday reached an agreement to sell Pinault a 40% stake in the Italian fashion house for $3 billion, prompting an immediate call from LVMH for the companies to return to court.

On March 3, Amsterdam’s commercial court deferred ruling on the legality of a “poison pill” share issue by Gucci, aimed at diluting LVMH’s 34% interest. It sent the two sides away to find an amicable solution and froze LVMH’s voting stake along with the voting rights attached to Gucci’s poison pill.

Back in court on Monday, LVMH was protesting Gucci’s plan to issue 39 million new shares to specialized distribution firm Pinault at $75 each, arguing that the action ran contrary to the court’s earlier decision.

The move would cut LVMH’s influence to 21%, give Pinault four seats on Gucci’s nine-member board and effective control of Gucci’s new strategy and finance committee.

“Gucci has made a public offer impossible,” James Lieber, advisor to LVMH Chairman Bernard Arnault, said during a break in the sometimes chaotic proceedings.

Among those crammed into the courtroom were Gucci President Domenic De Sole, LVMH executives and a sizable media contingent.

LVMH lawyers urged the court to overturn the Pinault deal and pave the way for it to make a public bid for all Gucci shares. LVMH has said it is willing to pay $81 per share, or $6.3 billion.

“The matter can only be resolved if it is possible to make a public offer for Gucci,” LVMH’s legal representative said.

Gucci’s board convened in London over the weekend to discuss two conditional bids for Gucci put forward by LVMH since the Pinault deal surfaced Friday.

Gucci said it would give serious consideration to the $81 bid, including Pinault’s stake, but rejected an $85-per-share bid for shares not in Pinault’s hands.

“The board determined that the $81-per-share offer should be given serious consideration because it is open to all shareholders,” Gucci said in a prepared statement.

Gucci said it had approached LVMH to discuss the offer in accordance with merger laws in the Netherlands, where Gucci is registered. That gives Gucci seven days to adopt a stance. Sources close to Gucci dismissed LVMH claims that the firm had already given up its independence to Pinault without sounding out other shareholders.

“Pinault presented us with a unique opportunity that will allow Gucci to develop new products,” one of Gucci’s lawyers said.

The court adjourned the hearing without rendering a verdict.