French luxury group LVMH, Italian jeweller Bulgari, Richemont, Swatch, Chaumet, Fred jewellery, Celine

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LVMH acquires Bulgari in 3.7 billion euro deal

March 8, 2011 – French luxury group LVMH is buying Italian jeweller Bulgari for 3.7 billion euros.
Bulgari will benefit from LVMH’s global retail network and boost margins through cost-sharing.
The deal will also help LVMH close the gap with watch and jewellery groups Richemont  and Swatch.
The total value of the deal, including 600 million euros of convertible bonds, was 4.3 billion. It will be paid for with 1.9 billion euros of new LVMH shares and 2.4 billion cash to buy out minority shareholders, financed half with debt and half with LVMH’s available cash.

LVMH’s brands include Chaumet and Fred jewellery, Celine and Kenzo fashion, Hennessy cognac and Moet & Chandon champagne.

The deal will double LVMH’s watch and jewellery business to make up 10 percent of its sales and about 6 percent of operating profit, analysts estimated.
Bulgari, established in 1884, had long been seen as a potential target having weakened its finances by embarking on big store investments when its sales were falling.
LVMH will buy the family’s holding in Bulgari of 50.4 percent of Bulgari by issuing 16.5 million LVMH shares.
In exchange, the Bulgari family will hold a 3.5 percent stake in LVMH and become the luxury group’s second largest family shareholder.
The French group also will launch a buyout offer for the remainder of Bulgari shares at 12.25 euros a share.
The Bulgari family will name two representatives to the LVMH board while Bulgari’s Chief Executive Francesco Trapani will join LVMH’s executive committee and run its watches and jewellery activities from the second half.

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