Since LVMH chief Bernard Arnault sneakily positioned himself for an eventual takeover of Hermès back in October, he’s been called a number of fantastically imaginative names by the Hermès family, including “a mosquito buzzing around” and “a visitor in the garden.” (The latter insult is either a biblical reference, or perhaps some sort of allusion to the Hermès family’s fancy private gardens, or possibly both.) The aristocratic clan has been busily posting newspaper ads and throwing lavish parties to portray the company as being so steeped in its old-money, horseback-riding heritage that a takeover by LVMH, which deigns to concern itself with working-class concerns like business and profits, would shake the brand’s identity right down to the very fibers of its luxuriously silky scarves. Which, since it’s raking in the dough these days, would probably not be a good thing.
Hermès CEO Patrick Thomas told WWD:
I don’t think a house like Hermès is capable of surviving in a universe controlled by money. This house has proved again and again that poetry is not incompatible with business … I sincerely hope that the power of money alone will not kill the pretty flower.
For his own part, Arnault has been content to stand back and watch Hermès go about their indignant snorting, keeping mum about future plans except to say that LVMH won’t attempt an aggressive takeover within the next six months. But it’s nigh impossible for him to do that anyway, since Hermès family members have strict rules requiring that they hold on to a majority stake of the company.
So what is Arnault’s motive, exactly? Industry insiders predict that he’s holding out for the family’s younger generation to cave to the prospect of being filthy rich and responsibility-free instead of filthy rich and having to go to board meetings, in which case they will most likely be open to striking a deal with LVMH. Indeed, it’s pretty much the only way that a takeover could logistically happen given the company’s structure.
Meanwhile, most experts think that consumers won’t really care if LVMH takes control of Hermès. “There is no emotional link to any founder. The emotional link is with the product: the horse, the saddle and leather,” said Catherine Veillé, president of branding consultancy Ipsos Insight Marques. As for all the drama? “At best, if consumers pay any attention to this, it’s because they are witnessing the kind of soap opera they usually see on television, and nothing more. It does not affect the image of the brand in the slightest,” she said.
Hermes v. LVMH: A French Battle and Dissecting the LVMH Strategy [WWD]
