Sep 27 (Askume) – French rival LVMH Moncler(MONC.MI) shares surged on Friday after Moncler invested in the Italian outerwear specialist (LVMHPA) .
Analysts said the news could revive speculation that Moncler could be acquired in the long term, but their focus was on the short-term benefits to LVMH from the deal, which strengthens its share of the $400 billion luxury goods industry.
Moncler shares rose as much as 15% in early trade after falling as much as 6.5% this year after LVMH announced late Thursday it had acquired a 10% stake in Double R, the investment vehicle controlled by Moncler CEO Remo Ruffini. Double R currently owns 15.8% of Moncler shares.
“If Moncler can be acquired, LVMH could have a chance to move to the front line,” said Bernstein analyst Luca Solca.
LVMH shares have fallen 7.5% so far this year due to a slowdown in the luxury goods industry, but rose 3.3% in early trade.
Milan-based Moncler has been one of the industry’s biggest success stories in recent years and is viewed as a potential takeover target or merger candidate by rival luxury goods groups looking to expand.
Promote the luxury goods industry
JPMorgan Chase said that although the stake is small at the moment and could remain small for some time, the deal is reminiscent of LVMH’s investment in Italian luxury shoemaker Tod’s.
Long-term Tod’s shareholder LVMH increased its stake in the Italian group to 10% in 2021, which sources at the time described as a “friendly support”.
“While LVMH has a strong track record of driving integration in the region, it has also demonstrated that it can play a role as a minority shareholder and long-term partner,” JPMorgan said.
News of the deal came on the same day as Askume reported that China plans further stimulus measures , boosting luxury brand shares on expectations it will boost spending on high-end goods.
Investors are worried about a slowdown in the luxury goods industry, especially in the key Chinese market, which is hit by slow economic growth and a housing crisis.
RBC analyst Piral Dadhania said: “From LVMH’s perspective, we believe this transaction makes sense given the current softness in the luxury industry.
