PPR scotches rumours of Gucci deal
The French luxury goods retailer Pinault Printemps Redoute (PPR) last week poured cold water on reports that it was close to agreeing a buyout of arch rival LVMH’s (Moët Hennessy Louis Vuitton) 20% stake in Gucci.
On Sunday, an UK newspaper reported that negotiations for the $1.4 billion buyout were well advanced and that PPR and Gucci’s bankers had already put together a package to facilitate the sale.
The report said the transaction would bring an end to the 'battle of the handbags' that has rumbled on since PPR took a 42% stake in Gucci in March 1999 - a manoeuvre that heavily diluted LVHM's 20% stake and effectively blocked it from taking control of the Florentine fashion house.
Gucci's chairman, Dominico de Sole and design director Tom Ford were reported to be insisting that if the deal did go ahead, PPR would have to give up its voting rights on the LVHM stake for several years, so as to protect the rights of Gucci's minority shareholders. Reference was also made to a 'coupon scheme' that would allow PPR to acquire the LVMH share without having to bid for the remainder - something which it would be compelled to do by law. Under the scheme, minority shareholders would be able to retain their shares and then sell them to PPR at a later date for an additional payment.
Despite the level of detail contained in the report, PPR chose to dismiss it as 'a fantasy' on Wednesday. Speculation had been rising that some form of deal would be struck soon, because of the publication next month of a report by a Dutch court into Gucci's earlier legal response to allegations made by LVMH, that it had acted improperly in accepting the PPR stake. It is widely thought that both parties are now anxious to bring an end to the dispute, before the next legal round begins with the publication of the report.
