Investing.com — Shares of Moncler rose on Friday after LVMH said it had bought a 10% stake in Double R, the investment vehicle of Remo Ruffini, which owns 15.8% of Moncler.
At 4:07 a.m. (0807 GMT), Moncler was trading 9.3% higher, while LVMH rose 2.9%.
This acquisition indirectly gives LVMH a 1.58% stake in Moncler Group. In addition, LVMH will secure one board seat at Moncler and two seats at Double R, reflecting its continued expansion into the luxury outdoor and performance apparel market.
Through this partnership, LVMH will support Double R to increase its current stake in Moncler from approximately 15.8% to a maximum of 18.5% over the next 18 months.
“Double R is expected to strengthen its control in Moncler to a maximum of 18.5%, funded by LVMH stock purchases in the market over the next 18 million years. LVMH will own up to 22% stake in Double R (or ~4% in Moncler),” Citi Research analysts said in a note.
LVMH will finance these future share purchases, which will also increase its own stake in Double R to a maximum of 22%.
The French luxury conglomerate’s investment is expected to further strengthen Remo Ruffini’s control as Moncler’s largest shareholder, allowing him to determine the company’s strategic direction and long-term development.
LVMH’s minority stake strengthens its long-term investment strategy by acquiring stakes in high-potential luxury brands while supporting their existing management teams.
“In the absence of share buybacks for LVMH (due to uncertainty over its treatment under French tax law), and a lack of credibility and sufficiently large acquisition targets, we view minority investments in 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 apparel 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, especially in the outdoor and active lifestyle segments, where Moncler has already established a strong position.
“From LVMH’s perspective, we view this deal as opportune, given the current weakness in the luxury sector, translating into lower stock valuations (e.g. Moncler’s Enterprise is valued at 13 billion euros and its shares are down ~30% in the past six months),” RBC analysts said
LVMH’s involvement is likely to further accelerate Moncler’s international growth, expand its product lines and strengthen its positioning in new markets.
