PARIS (Reuters) -Shares in Moncler rose sharply on Friday after French rival LVMH invested in the Italian outerwear specialist, fuelling speculation about the long-term intentions of the owner of Louis Vuitton and Moet & Chandon champagne. Consequently, analysts predict that this movement could signal a broader trend in the LVMH luxury sector. #LVMHluxurysector
Analysts believe the news could reignite speculation about a potential takeover of Moncler. However, they focus on the near-term advantages for LVMH. This deal reinforces LVMH’s dominance in the $400 billion luxury sector.
Shares in Moncler had fallen 6.5% this year. However, they jumped as much as 15% after LVMH announced a 10% stake purchase. This stake is in Double R, controlled by Moncler CEO Remo Ruffini.
The deal amounts to an around 1.6% stake for LVMH in Moncler with the potential to grow it to 4% over the next 18 months, analysts said.
“LVMH is getting maybe the opportunity down the road to be in the first row if and when Moncler could be up for grabs,” said Luca Solca, analyst at Bernstein.
Moncler shares were up 10% by 0944 GMT, while shares in LVMH, down 7.5% year-to-date amid a slowdown in the luxury sector, were 2% higher.
Milan-based Moncler, famed for its upmarket puffer jackets and one of the industry’s biggest success stories in recent years, had been seen as a potential acquisition target or merger candidate for rival luxury groups seeking to expand.
While LVMH’s stake is currently small, and will likely remain small for a while, the agreement recalls the French group’s investment in Italian luxury shoemaker Tod’s, said JPMorgan. #LVMHluxurysector
A longstanding shareholder in Tod’s, LVMH in 2021 raised its stake in the Italian group to 10% in a move that sources at the time described of “friendly support”.
LVMH Luxury Sector: A Catalyst for M&A Speculation!
Moreover, this deal has sparked renewed speculation about mergers and acquisitions within the luxury market. Industry experts believe that other luxury brands may follow suit. Therefore, the LVMH luxury sector is likely to attract even more interest in upcoming months.
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