MC Lvmh Moet Hennessy Louis Vuitton SE

By Matthew Dalton 

PARIS--French billionaire Bernard Arnault on Tuesday announced a plan to take full control of Christian Dior SE, saying his family is proposing to pay EUR12 billion ($13.04 billion) for the stake in the fashion company it doesn't already own.

The plan will allow the French luxury conglomerate LVMH Moët Hennessy Louis Vuitton SE to take control of Christian Dior Couture, Christian Dior's operating subsidiary. The Arnault family controls LVMH, the world's largest luxury company, and Mr. Arnault is its founder and chief executive.

Christian Dior Couture is currently considered an independent affiliate of LVMH despite having the same controlling shareholder.

The proposed transaction would be the 68-year-old Mr. Arnault's biggest acquisition in years, giving LVMH one of the most storied brands in fashion. It also marks the culmination of Mr. Arnault's decadeslong turnaround of Dior, which he purchased in the 1980s and used to build his empire of luxury brands.

Though LVMH and Dior have routinely cooperated with each other, LVMH executives said the companies can't share marketing, finance and administrative resources because of their differing shareholders. That should change once the deal is complete, they said.

Mr. Arnault said the plan would simplify the structure of the businesses, which had "long been requested by the market," as well as strengthen LVMH's fashion and leather-goods division with the addition of Christian Dior Couture.

Shares in Christian Dior soared 12% on the news in afternoon trading in Paris, while LVMH was up about 4%.

The deal reshuffles LVMH's complex corporate relationship with Christian Dior and the Arnault family. The family owns 74.1% of Christian Dior, which in turn owns a controlling stake in LVMH. Under the deal, the Arnault family is offering to buy the 25.9% of Christian Dior it doesn't own for EUR260 a share, valuing that stake at EUR12 billion. The price is a 14.7% premium to where Christian Dior's shares closed on Monday.

"The price we're paying is perhaps a little expensive, but in 30 years we'll be happy we did it," Mr. Arnault said at a press conference.

The transaction will also see Mr. Arnault reduce his holdings of Hermès International SCA. Mr. Arnault had accumulated an 8.5% stake in the French luxury house during an aborted attempt several years ago to take over the company.

Mr. Arnault is proposing to buy Dior's shares in a mix of cash and his Hermès shares. News that Mr. Arnault's shares would be hitting the market pushed Hermès shares down by more than 4% in afternoon trading.

In an internal transaction, LVMH will then buy Christian Dior Couture, the fashion subsidiary of Christian Dior, in a deal that values the unit at EUR6 billion.

Dior's results have surged in recent years, with the company reporting a profit of EUR252 million on sales of EUR1.9 billion last year, compared with EUR85 million on sales of EUR1 billion in 2011.

The brand has long been at the core of Mr. Arnault's luxury empire, said Concetta Lanciaux, a former LVMH executive who worked with Mr. Arnault for 25 years.

"Dior was the first one," Ms. Lanciaux said. "Your first one is always the best."

Write to Matthew Dalton at Matthew.Dalton@wsj.com

(END) Dow Jones Newswires

April 25, 2017 09:00 ET (13:00 GMT)

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