Hermes International: Protecting its Family Business from LVMH’s Hostile Takeover

ABSTRACT

This case discusses how Hermes International SCA (Hermes), France-based luxury goods manufacturer, thwarted a takeover attempt of its family-managed business by France-based world leader in high-quality luxury products, LVMH Moet Hennessy Louis Vuitton SA (LVMH), in a bid to preserve its core values and culture and keep the family-managed business independent. Hermes was founded in 1837 by leather harness maker, Thierry Hermes. Over the years, members of succeeding generations of the Hermes family took over the reins of the family business. In 1978, Jean Louis Dumas (Jean Louis), a fifth generation member of the Hermes family, assumed the leadership at Hermes at a time when the company’s fortunes were declining...

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Issues

The case is structured to achieve the following teaching objectives:

• Study how the core values of craftsmanship, quality, and its rich history made Hermes one of the most renowned luxury brands in the world.
• Understand how fostering a culture of creativity and perfection was crucial in achieving success for the family-managed business.
• Critically analyze the hostile takeover attempt by LVMH.
• Understand the defense strategies adopted by Hermes to thwart LVMH’s hostile takeover.
• Analyze the role of the Hermes family’s board in the takeover battle.
• Understand how the takeover would dilute the family-managed business’ core values and culture.
• Discuss the issues and challenges in keeping family-managed businesses independent.

Keywords

Hermes International, LVMH, Axel Dumas, Bernard Arnault, Family-managed business,Craftsmanship, Core values, Culture, Creativity, Cash-settled equity swaps, Hostile takeover, Family legacy, Succession planning, Paris Commercial Court, Autorité des Marchés Financiers, Groupe Arnault SAS

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