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UPDATE 1-AMF to tell Hermes in Jan about buyout waiver

Published 12/29/2010, 09:49 AM
Updated 12/29/2010, 10:09 AM

* AMF to decide in Jan whether Hermes gets buyout waiver

* Hermes aims to ward off LVMH through family holding (Adds detail)

By Matthieu Protard and Julien Ponthus

PARIS, Dec 29 (Reuters) - Hermes should find out in January whether it will have to buy out minority shareholders as part of plans to create a family holding to ward off rival LVMH, French markets regulator AMF said.

The French luxury group decided earlier this month to create a holding that would allow family shareholders to control more than 50 percent of equity to defend itself against LVMH's unwelcome swoop on more than 20 percent of its share capital.

Legally, shareholders, once united through a pact or a holding, need to launch a buyout of other shareholders once their holding climbs above 33 percent.

However, under certain circumstances, they may obtain a waiver from the AMF.

"The (AMF) board should take its decision in January after having gathered opinions and arguments from various parties," Thierry Francq, AMF Secretary General told Reuters.

LVMH announced last week it owned 20.21 percent of Hermes, after having discreetly built up a 17.1 percent stake starting in 2008, mainly via derivatives.

The French association of minority shareholders has already said it opposed Hermes getting a buyout waiver from the AMF.

LVMH's pounce on Hermes via derivatives known as equity swaps, together with Hermes's defence measures, have exposed loopholes and weakness in the French stock market regulation.

Equity swaps had enabled LVMH to avoid having to declare its stake-building in Hermes.

In November, AMF head Jean-Pierre Jouyet said French Economy Minister Christine Largarde had told him that she wanted to modify legislation to ensure that all possible instruments would be counted in the passing of stakeholder thresholds.

Hermes family shareholders, which number around 60, and together own about 73 percent of the company, have called for Bernard Arnault, LVMH's controlling shareholder and chief executive, to withdraw from its capital. (Writing by Astrid Wendlandt; Editing by Erica Billingham)

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