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Gucci-LVMH Takeover Battlement

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Group Members:

Group Members:
KOK KEAN TEONG
MOH JIA WEI
NEO CHING HUP
ONG KAH HOEY
TEO SILK KEONG

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Gucci-LVMH Takeover Battlement Gucci-LVMH Takeover Battlement Presentation Transcript

  • CAEA 3231 Integrated Case Study Group Members: KOK KEAN TEONG CEA070059 MOH JIA WEI CEA070084 NEO CHING HUP CEA070109 ONG KAH HOEY CEA070157 TEO SILK KEONG CEA070197
  • The Battle of Takeover
  • Introduction of Takeover
  • Friendly Takeover
  • Hostile Takeover
  • Hostile Takeover
  •  
  •  
  • Procedures Involved in Takeover
  • Hostile Takeover Defense Strategies
  • Introduction
    • Gucci Group NV (Target Company)
      • Italian company
      • Incorporated in Netherland
      • Sells French Fashions
      • CEO: Prior 2004> Mr. Domenico De Sole
      • 2004 until now>Mr. Robert Polet
      • Stocks traded on NYSE and Amsterdam Stock Exchange
  • Introduction
    • LVMH Moet Hennessy Louis Vuitton SA (Attacker)
      • World largest luxury group
      • French company
      • Incorporated in Paris
      • Sells French Fashions
      • CEO: Mr. Bernard Anault
      • Stocks traded on Nasdaq Stock Market Trading and Paris Stock Exchange
  • Introduction
    • PPR-Pinault Printemps Redoute SA ( White Knight)
      • World 3 rd largest luxury group
      • French company
      • Incorporated in Paris
      • Europe largest non food retail group
      • CEO: Mr. Francois Pinault
      • Stocks traded on Paris Stock Exchange
  • History: 1923-1989 1923-1953
  • History: 1989-1995 50% 50% 1993 1995- Go Public
  • The Start of the Battle (1999)
  • The Start of the Battle (1999)
  • Ways to amass 34.4% of stake
  • The Start of the Battle (1999)
  • The Difference Regulations between Countries
  • The Start of the Battle (1999)
  • Analysts’ View
    • Reasons to take control over Gucci:
      • LVMH damaged by turmoil in Asia and losses at its retail division
      • Gucci is seen as undervalued, strongly managed, and having potential growth
      • Gucci is geographically attractive
      • Gucci has higher % of sales in US
  • The Real Reason
  • The Start of the Battle (1999)
  • The Start of the Battle (1999)
  • The Standstill Agreement between PPR and Gucci
    • Strategic Investment Agreement
      • PPR is allowed to increase stake to 42% and disallowed to increase any stake >42% in 5 years time
      • PPR is allowed to increase max 10.1% stake if LVMH increase its stake in Gucci
      • If LVMH launch full bid, PPR has option to sell all shares or offer higher bid to buy Gucci
      • Gucci can acquire Yves Saint Laurent and other perfume Lines from PPR for $ 1 billion
  • The Process of Full Takeover Bid
  • Court’s Decision
    • Gucci is guilty for mismanagement in terms of timing (article 2:8 of the civil code )
    • ESOP is invalid
    • PPR’s 42% stake in Gucci is valid
  • Dutch Supreme Court’s Decision
    • held that the enterprise chamber was wrong in finalized any decision without an official inquiry
    • The chamber then appointed 2 Dutch Lawyers and a former CEO of a large financial institution as official investigators
  • Peace Negotiations
    • LVMH, Gucci and PPR met at offices at Darrois Villey in Paris
    • Came out with a settlement agreement and revised Strategic Investment Agreement
  • The Settlement Agreement
    • PPR spent $812 million to buy 8.6 million shares from LVMH at a price of $94 per share (a $2 premium) and making PPR own 53.2% of Gucci
    • A special dividend of $7 per share will be given to all shareholders except PPR
    • PPR will buy all shares which does not belongs to PPR at $101.50 in 2004
    • PPR has the right to a majority of the board and designate the chairman after the completion of the offers in 2004
    • LVMH will forgo all of the legal claims against Gucci and PPR
  • The End of the Battle (2001)
    • LVMH – capital gain of 760 million euro
    • Gucci- no longer under attack and able to do a lot of acquisitions
    • PPR- able to get full control over Gucci in 2004
  • Changes in Structures Prior and After the Takeover Process
  • Share Price Source: Moneycentral.msn.com
  • Share Price Share Price: Annual 2002-1998 Source: SEC report on 31/7/2003 Year   NYSE High   US$ Low   Euronext Amsterdam High   € Low 2002   99.4   82.5   110.9   83.9 2001   94.7   66.7   109.1   66.5 2000   116.2   72.9   122.0   81.4 1999   121.5   61.0   121.9   56.6 1998   75.3   31.5   65.0   26.1
  • Capital Structure IAS Financial Data of Gucci 1998-2000 (in Euro Million) Source: SEC report on 31/7/2003
  • Top Management Members of the Management Board ( July 1, 2003 ): Name   Position   Age   Year of Initial Election Domenico De Sole   Chairman   59   1995 Tom Ford   Vice Chairman   41   2002 Aart Cooiman   Member   61   1995
  • Top Management Members of the Supervisory Board ( July 1, 2003 ): Name   Position   Age   Year of Initial Election Adrian D.P. Bellamy    Chairman   61   1995 Patricia Barbizet   Member   48   1999 Aureliano Benedetti    Member   67   1995 Reto F. Domeniconi   Member   67   1997 Patrice Marteau   Member   55   1999 François Henri Pinault   Member   40   2001 Karel Vuursteen    Member   61   1996 Serge Weinberg    Member   52   1999
  • Business Structure
  • Business Structure
  •  
  • Corporate Financial Performance Revenue (Euro Million) Source: SEC report on 31/7/2003
  • Corporate Financial Performance Operating Profit (Euro Million) Source: SEC report on 31/7/2003
  • Ownership Share Ownership (as a % of shares outstanding on  July 1, 2003 ) Source: SEC report on 31/7/2003 Name   No. of Shares Beneficially Owned   Percent of Outstanding Share Capital   Pinault-Printemps-Redoute S.A.   64,233,996 64.6 % Crédit Lyonnais S.A.   11,484,609 11.5 %
  • Analysis of Similar Major Takeover That Wasn’t Successful
  •  
  • Impact of Takeover Failure to Industry
  • Impact of Takeover Failure to Economy
  • Conclusion
  •