Hermès' united front on takeover

The family said none of its members was willing to sell a "significant" stake in the firm after LVMH, which owns a raft of the world's most prestigious brands including Louis Vuitton, Krug and Scotland's Glenmorangie, announced at the weekend that it had taken a 17 per cent holding in the business.

The united front from the extended Dumas family, which has been fiercely protective of Herms' independence, is likely to put paid to suggestions that LVMH will sell its drinks arm, which also owns Glen Moray and Ardeg, to Diageo.

Analysts proposed that LVMH would have to offload its drinks operation in order to fund a full takeover bid, which would probably cost more than €18.6 billion (16.5bn).

The identity of the stake's seller won't be revealed until tomorrow but Patrick Albaladejo, deputy chief executive of Herms, appeared to suggest yesterday that the culprit was not a family member. He said the firm was "very surprised" at the LVMH announcement.

Meanwhile, the French regulator, AMF, said yesterday that it would look into whether market rules had been respected in relation to the build-up of the stake.

Although Bernard Arnault, head of LVMH and France's richest man, denied all suggestions that the weekend's move was the precursor to a full ownership attempt, it sparked immediate speculation that he would have to sell part of his luxury empire to finance such a move.

Eyes immediately turned to Diageo whose chief executive Paul Walsh has made no secret of the fact he is interested in the Mot Hennessy (MH) business, which also owns Dom Prignon and Veuve Clicquot.

It was suggested yesterday that Diageo's advisers had been put on alert to look into a potential deal with LVMH.

A spokesman for Diageo declined to comment but insiders at the drinks giant suggested that, while it remained interested, there had been no suggestions from LVMH that a deal could be struck.

"It (Mot Hennessy] would be a good strategic fit if the price was right but at the moment nothing has really changes," said one insider."The ball is in their court."

Eddy Hargreaves, an analyst at Charles Stanley, suggested LVMH would be unlikely to part with the drinks business even if Arnault did proceed with a full takeover attempt of Herms.

"We do not think that LVMH would willingly sell the MH stake; nor do we think it will need to," he said.

LVMH said in a statement on Saturday: that it had "no intention of launching a tender offer, taking control of Herms nor seeking board representation".

The firm added: "The objective of LVMH is to be a long-term shareholder of Herms and to contribute to the preservation of the family and French attributes which are at the heart of the global success of this iconic brand."

However, questions have been asked over the future strategy of Herms since the death of its patriarch Jean-Louis Dumas earlier this year.

The extended family, which is believed to have as many as 50 members, now has control of the brand, famous for its "Birkin" bags and scarves,.

Their collective stake amounts to around 72 per cent.