Investing.com -- LVMH (EPA:LVMH) on Thursday said it has purchased a 10% stake in Double R, Remo Ruffini's investment vehicle, which owns 15.8% of Moncler, indirectly giving LVMH a 1.58% stake in Moncler Group (BIT:MONC). LVMH will also have one board seat on Moncler and two on Double R.
Double R holds a major stake in Moncler, a globally renowned luxury outdoor and performance brand, further marking LVMH's interest in diversifying its portfolio within the luxury sector.
Through this partnership, LVMH will support Double R to increase its current holding in Moncler from about 15.8% to up to 18.5% over the next 18 months.
“Double R is expected to reinforce its control in Moncler up to a maximum of 18.5% funded by LVMH share purchases in the market over the next 18m. LVMH will own a maximum 22% stake in Double R (or ~4% in Moncler),” said analysts at Citi Research in a note.
LVMH will fund these future share purchases, which will also increase its own stake in Double R up to a maximum of 22%.
The French luxury conglomerate’s investment is expected to further reinforce Remo Ruffini's control as the largest shareholder of Moncler, enabling him to drive the company’s strategic direction and long-term development.
LVMH’s minority stake reinforces its long-term investment strategy in acquiring stakes in high-potential luxury brands while supporting their existing management teams.
“In the absence of share buybacks for LVMH (owing to uncertainty with French tax law treatment), and a lack of credibility and sufficiently large take-out targets, we view minority investments into already established groups as the next best alternative use of excess cash,” RBC added
For LVMH, the investment represents an opportunity to further diversify its brand portfolio with a strong presence in the fast-growing luxury outdoor and performance wear sector.
For Moncler, the partnership brings additional resources and support for future expansion and innovation in an increasingly dynamic market.
This investment comes at a time when the luxury sector is witnessing rapid growth, particularly in the outdoor and active lifestyle segments, where Moncler has already carved out a strong position.
“From LVMH's perspective, we view this deal as opportune given current weakness across the luxury sector, and translating to lower equity valuations (e.g. Moncler's Enterprise value is €13bn and its shares are down ~30% in the last six months),” said analysts from RBC
LVMH’s involvement is likely to further accelerate Moncler’s international growth, expand its product lines, and strengthen its positioning in new markets.