Arnault family simplifies LVMH structure to consolidate control

Four years after a reorganisation, the Arnault family group aims to simplify the structure overseeing the global luxury giant LVMH. This move is intended to “ensure the long-term stability of its control” through several operations that will result in the creation of a single entity.

According to a proposal presented to the board of directors of Christian Dior, LVMH's main shareholder, the Arnault family intends to merge its holdings. Christian Dior announced in a statement on Wednesday that this is to “ensure the long-term stability of its control” over the group.

Arnault family to merge holdings

This new reorganisation is expected to lead to the creation of a single company that will control LVMH. It will be achieved through several merger and transformation operations, under which the intermediate holding company Christian Dior will be converted into a limited partnership with shares.

Currently, Agache holds 100 percent of Financière Agache. Financière Agache, in turn, holds 96 percent of the capital and 97.10 percent of the voting rights of the intermediate holding company Christian Dior. Bernard Arnault's eldest son, Antoine, has been its managing director since 2022. It also holds 6.77 percent of the capital and 8.49 percent of the voting rights in LVMH.

Following the “merger of Financière Agache into Agache, it is planned that Agache will be merged into Christian Dior, which would simultaneously be transformed into a limited partnership with shares and renamed Agache,” the statement explained.

The future company will hold a direct stake in LVMH of 49.76 percent of the capital and 65.55 percent of the voting rights. The operation would thus consolidate the majority of the Arnault family group's stake in LVMH, amounting to 50.33 percent of the capital and 66.27 percent of the voting rights.

The limited partnership structure is known for its features that facilitate succession within a family business. It also allows for the separation of management and capital ownership and serves as a deterrent against hostile takeover bids.

Succession

This legal structure is used by a few companies, such as the tyre manufacturer Michelin and the luxury group Hermès. “The limited partnership structure, adopted by the Arnault family in 2022 with the transformation of Agache into a limited partnership with shares, would thus be maintained in line with the Arnault family group's desire to ensure the long-term stability of its control over LVMH,” the statement specified.

Agache Commandité and Bernard Arnault, the CEO of LVMH, would remain general partners of the new entity, with Bernard Arnault serving as its manager, it continued.

After presenting the project at an extraordinary general meeting of Christian Dior in December, the Arnault family group will have to file a public buyout offer, settled entirely in cash, for all the Christian Dior shares it does not own, which amounts to 2.44 percent of the capital. This will not be followed by a compulsory delisting from the Paris Stock Exchange, where Christian Dior is listed.

This simplification comes amid questions about Bernard Arnault's succession. During the giant's general meeting in April, the 77-year-old billionaire preferred to postpone questions on the subject.

“We will talk about all this again in seven or eight years,” he told shareholders at the time. In 2022, LVMH had voted to amend its statutes, raising the age limit for the CEO to 85.

The businessman's five children all work within the world's number one luxury group. Four of them are on the LVMH board of directors, and two of them, Antoine Arnault and Delphine Arnault, are on the executive committee.

Amid a global slowdown in the luxury sector, LVMH was recently dethroned by cosmetics giant L'Oréal as France's largest company by market capitalisation.