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LVMH takes control of Dior

DiorFrench luxury empire LVMH has agreed to take full control of fashion giant Christian Dior in a mammoth deal worth around €12.1 billion (A$17 billion).

Billionaire Bernard Arnault’s LVMH – which houses a raft of brands including Louis Vuitton and Moet Hennessy – announced it was buying the remaining 26 per cent of Christian Dior it does not already own, while also revealing it will fold the fashion house’s 70-year-old couture label into its group for €6.5 billion.

The deal, valuing Dior at €260 a share, marks one of LVMH’s biggest ever acquisitions and sees it add Christian Dior Couture to its stable, joining Dior perfumes, which it has owned since the 1960s.

Arnault said the deal was an “important milestone”and that Christian Dior Couture’s enterprise value of €6.5bn represented a 15.6x EBITDA4 multiple for the company.

He added that it would “allow the simplification of the structures, long requested by the market, and the strengthening of LVMH’s fashion and leather goods division thanks to the acquisition of Christian Dior Couture, one of the most iconic brands worldwide”.

The Arnault family already owns controlling stakes in both Dior and LVMH.

They said the full acquisition of Dior will also boost LVMH earnings from the first year, with the transaction expected to be complete during the second half of 2017.

Designer Christian Dior founded the House of Dior in 1946, with backing from businessman Marcel Boussac.

It has since expanded into perfume, watches and accessories and the couture arm has 198 stores worldwide.

Designers Pierre Cardin and Yves Saint Laurent also once worked for the House of Dior. Dior died in 1957.

The luxury label continued its growth momentum over the last twelve months, with revenue in excess of €2bn, an EBITDA of €418m3 and profit from recurring operations of €270m.

The acquisition will be accretive (+2.7 per cent on a pro forma basis) to LVMH earnings per share from the first year. Following the acquisition, LVMH’s gearing will increase from 12 per cent as of December 31, 2016 to 35 per cent on a pro forma basis.

LVMH said the Christian Dior Couture will be a source of growth and the development will be supported over the coming years by a new creative momentum and significant investments, notably in America, China and Japan.

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