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LVMH to bag YSL
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December 14, 1998: 7:46 a.m. ET
Report: fashion house to be gobbled up by luxury goods giant for $900M
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LONDON (CNNfn) - Yves Saint Laurent, the French fashion house, is set to join the fashion empire of luxury brands giant LVMH Moet Henney Louis Vuitton, according to press reports.
Sanofi (PSQ), the French pharmaceuticals group, confirmed Monday that it is in talks with LVMH (PMC) over the sale of its beauty products division, which includes YSL.
The news follows reports in Le Figaro, the French newspaper, that LVMH will acquire the division for 5 billion francs ($900 million). The company declined to comment further on the discussions.
LVMH was unavailable for comment.
"Le Figaro proved to be a reliable source for information about recent Sanofi deals, so this report is credible," said Cedric Magnelia, an analyst at Credit Suisse First Boston.
Magnelia said the YSL brand accounted for around 80 percent of the value of Sanofi's cosmetics division, which it is selling as part of its strategy to become a focused pharmaceuticals group after its merger with French drug company Synthélabo (PSD).
Magnelia said the proposed price tag of 5 billion francs and the assumption of 1.2 billion francs of debt was at the top end of the range. However, LVMH could reap synergies in brand management, cosmetic production and distribution.
Rival offers for the division, from groups such as Unilever (ULVR) and Procter & Gamble (PG) are possible.
Le Figaro reported that a deal has been cut to accommodate YSL's longserving head, Pierre Bergé, the man credited with establishing the brand as a premier haute couture name.
Earlier talks between LVMH and YSL are said to have collapsed several years ago because Bergé was unhappy with the terms.
The newspaper said LVMH chairman Bernard Arnault had agreed to retain Bergé for at least two years.
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LVMH
Synthélabo
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