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Why was LVMH interested in acquiring Gucci? Was
Gucci justified in claiming that there would be no
synergies from the Gucci-LVMH alliance ?


•   Asian financial crisis force PVMH suddenly had to look west to the American
    market.
•   In America luxury goods market growing four times faster as in global market.
•   Poor performance of Flamboyant garments of LVMH in USA.
•   Popularity of Gucci creation in US market.
•    Sales of LVMH decline and Gucci’s sales went up 10 percent to 1998 from 1997.
•   LVMH wants to increase sales and building strong brand base in USA.
•   Arnault was plotting a creeping takeover to dominate Gucci’s board.
•   De Sole claimed that Except for Vuitton other brands of LVMH are terribly.
    so, there is no chances of positive synergy after merging of Gucci and LVMH.
Comment on the defense strategies adopted by Gucci. Wasn’t
the PPR stake acquisition also a form of takeover even if it had
                       Gucci’s approval?


•   De Sole used poison pill in form of an ESOP scheme so, LVMH’s stake get diluted.
•   Assembled a team of lawyers and bankers to search for white knight.
•   Issued more shares in the group in favor of stake of PPR and et the end of the deal
    stake of PPR is 40 %.
•   LVMH’s stake diluted to 20 % from 34 %.
•   PPR has played a role of white knight not for d purpose of takeover.
•   Gucci management decided to implement ESOP and out of this ESOP
    approximately 20 mn shares were immediately subscribed to.
•   Gucci management controlled the ESOP shears. So, the takeover threat was
    removed.

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Presentation of gucci

  • 1. Why was LVMH interested in acquiring Gucci? Was Gucci justified in claiming that there would be no synergies from the Gucci-LVMH alliance ? • Asian financial crisis force PVMH suddenly had to look west to the American market. • In America luxury goods market growing four times faster as in global market. • Poor performance of Flamboyant garments of LVMH in USA. • Popularity of Gucci creation in US market. • Sales of LVMH decline and Gucci’s sales went up 10 percent to 1998 from 1997. • LVMH wants to increase sales and building strong brand base in USA. • Arnault was plotting a creeping takeover to dominate Gucci’s board. • De Sole claimed that Except for Vuitton other brands of LVMH are terribly. so, there is no chances of positive synergy after merging of Gucci and LVMH.
  • 2. Comment on the defense strategies adopted by Gucci. Wasn’t the PPR stake acquisition also a form of takeover even if it had Gucci’s approval? • De Sole used poison pill in form of an ESOP scheme so, LVMH’s stake get diluted. • Assembled a team of lawyers and bankers to search for white knight. • Issued more shares in the group in favor of stake of PPR and et the end of the deal stake of PPR is 40 %. • LVMH’s stake diluted to 20 % from 34 %. • PPR has played a role of white knight not for d purpose of takeover. • Gucci management decided to implement ESOP and out of this ESOP approximately 20 mn shares were immediately subscribed to. • Gucci management controlled the ESOP shears. So, the takeover threat was removed.