Luxury giants LVMH and Gucci in talks

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Retail group Pinault Printemps Redoute (PPR) said in a statement yesterday it was in talks with LVMH over its disputed stake in Gucci. A spokeperson for LVMH, the largest group in the luxury goods industry and most active in travel-retail, confirmed that negotiations were underway.

The UK's Financial Times reported yesterday that PPR, which currently owns 42% of Gucci, would buy one third of LVMH's 20% stake. In a complex deal, Gucci would then pay a special dividend to all shareholders, other than PPR, which would bid for the remainder of LVMH's stake in 2004.

Earlier this year an investigation began in the Dutch courts after a legal challenge by LVMH and other minority shareholders, into the capital increase which enabled PPR to take a sizeable stake in Gucci, and to become the largest shareholder, thus diluting LVMH's share.

At stake is the future strategic direction of Gucci. In 2000 travel-retail, including DFS Group, accounted for approximately 30% of LVMH Group revenues of $10.8bn.