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Family-controlled luxury groups swap shares

Bernard Arnault

Family-controlled luxury goods company LVMH announced on 7 March that it will take a controlling stake in fellow family business Bulgari, in a share swap deal which will see the Bulgari family own 3% of LVMH.

In a statement, Paris-based LVMH said that it will take control of 51% of shares held by the Bulgari family, and in return the Bulgari family will get a 3% stake in LVMH, to make it the second-largest family shareholder in LVMH.

The Rome-based jewellery house was founded in 1884 by Sotirio Voulgaris and is now headed by third-generation grandsons Paolo and Nicola Bulgari, who serve as chairman and vice-chairman respectively. Nephew Francesco Trapani is the chief executive, and will join the executive committee of LVMH on completion of the deal. He will also become head of LVMH’s watches and jewellery business in the second half of 2011.

Trapani said in a statement: “Our entrance into LVMH will allow Bulgari to reinforce its worldwide growth and to realise noteworthy synergies, in particular in the areas of purchasing and distribution.”

This announcement comes on the wake of a battle between LVMH and another family-controlled luxury goods company Hermes. The luxury company famous for its Kelly handbags had to ward off an attack from the bigger rival company headed by Bernard Arnault, which secretly built a 20% stake in the family business.

LVMH began in 1987 after Arnault used his family's money to purchase Christian Dior. The Arnault family own a 47% stake in LVMH through the family's holding company, Groupe Arnault. The company announced 2010 revenues of €2.3 billion, while Bulgari had 2009 revenues of around €925 million.

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