Shares in Gucci Group soared 23 percent yesterday on speculation that luxury goods giant LVMH Moet Hennessy Louis Vuitton may launch a bid to acquire the Italian fashion house.
Gucci shares jumped 1213/16 to 685/8 on the New York Stock Exchange, after LVMH boosted its stake to more than 5 percent from 4.9 percent.
The exact percentage wasn’t revealed.
French-owned LVMH, whose luxury brands include Dom Perignon and Veuve Cliquot champagne and the fashion houses of Givenchy and Christian Lacroix, refused to comment on its plans.
Gucci, for its part, insisted it was as surprised as everyone else. President and CEO Domenico De Sole said, “We understand that LVMH will be making a statement in the coming days.”
If LVMH is after Gucci, it may have competition. The Italian fashion house Prada raised its stake in the company to more than 10 percent last year.
Retail analysts say there is good reason to pursue Gucci. They applaud it for racking up a jump of nearly 4 percent in profits during the third quarter, reversing the four previous quarters of declines.
Part of that is due to stabilizing economies in Asia, where Gucci gets 40 percent of its profits. The yen’s recent weakness against the dollar has made Gucci clothes and accessories far cheaper for Japanese buyers in particular.
Investors have been bidding up Gucci stock for several months. It has more than doubled since hitting its September low of 32, more in keeping with an Internet stock than its retail cousins, which have been in the doldrums.
LVMH has been prowling for acquisitions lately. Two weeks ago if failed in a bid to acquire Sanofi Beaute, the beauty products division of Italy’s Sanofi.
Analysts are split on whether the French company wants or needs to take over Gucci. Some predict it will sell its stake in the U.K. food and drink-maker Diageo to finance a majority stake in the Italian company, because it has more synergies with Gucci. Others insist the companies are too much alike, with their heavy exposure to Asia, to make it a sensible investment for LVMH.