LVMH Moet Hennessy Louis Vuitton, the French luxury products group, will buy U.S. fashion house Donna Karan International Inc. for $243 million. The group will also purchase Gabrielle Studios Inc., a private company that owns the Donna Karan brand names, for $400 million.
LVMH will pay $10.75 per share for Donna Karan International, 26% more than the original offer of $8.50 a share LVMH made in December (see related article). However, to make up the difference, LVMH reduced its bid on Gabrielle Studios from $450 million.
LVMH's purchase of Donna Karan is its largest investment in the U.S. fashion industry to date. "We look forward to closing the transaction and to moving forward with Ms. Karan and her team to help expand both the product line and geographic reach of this globally successful lifestyle brand," says LVMH President Yves Carcelle. Both companies say Donna Karan will remain artistic director and retain control over the creative aspects of the company after the merger.
The acquisition is expected to be finalized in the third quarter, pending approval by shareholders and government regulators. At that time, Donna Karan International will be combined with Gabrielle Studios. Shareholders representing 42% of outstanding Donna Karan shares have already agreed to vote in favor of the merger, the Associated Press reports.
- by Julia M. Duncan