Shares of LVMH Moët Hennessy Louis Vuitton, or LVMH (FR:MC) soared yesterday after the company announced a partnership with an entity related to Italian fashion brand Moncler’s (IT:MONC) CEO Remo Ruffini. Through this deal, Ruffini intends to solidify his status as Moncler’s largest shareholder, while LVMH enhances its dominance in the global luxury market.
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Following the announcement, LVMH shares rose nearly 10% yesterday, while Moncler opened 8% higher for today’s session.
LVMH is a European conglomerate that owns luxury brands such as Dior, Louis Vuitton, Sephora, Fendi, and Bulgari, among others. Meanwhile, Moncler is an Italian fashion label and lifestyle brand known globally for its down jackets and activewear.
LVMH Collaborates with Remo Ruffini
As part of this collaboration, LVMH has acquired a 10% stake in Double R, a corporate vehicle controlled by Ruffini Partecipazioni Holding, which directly holds about 15.8% of Moncler. After this transaction, LVMH now holds the right to appoint two members to Double R’s board and one member to Moncler’s board.
Over the next 18 months, Double R will purchase additional shares of Moncler, potentially increasing Ruffini’s stake to 18.5%. The acquisitions will be funded by LVMH, which could boost its investment in Double R to around 22%.
LVMH, with its substantial financial resources, has been actively pursuing acquisitions to expand its portfolio in the luxury market. LVMH’s CEO Bernard Arnault is well-known for his dealmaking expertise, evident in the company’s diverse range of 75 brands. Arnault expressed his optimism on the latest deal, stating that the company is pleased to make this investment while supporting the independence of the Moncler Group.
Interestingly, Moncler is recognized as one of the industry’s standout success stories in recent years. It was considered a potential acquisition target by rival luxury brands aiming for growth.
Is LVMH Stock a Good Buy?
Overall, MC stock has received a Moderate Buy rating on TipRanks, backed by a total of 16 recommendations, including 10 Buy and six Hold ratings. The LVMH share price target is €775.33, which is 11% higher than the current trading level.
