LONDON (CNNfn) - French luxury goods group LVMH gave a strong hint Thursday that it was close to resolving its acrimonious court battle with Gucci, after the two sides agreed to a meeting.
Lawyers from the two warring parties are due to sit down together in Amsterdam Friday in a bid to hammer out details of LVMH's representation on Gucci's board.
The French group, owner of brands such as Louis Vuitton luggage, Moët et Chandon champagne and Hennessy cognac, launched a lawsuit against Gucci in late February alleging the Italian fashion house was using "legal trickery" to dilute LVMH's 34 percent holding in the company.
LVMH built up the stake over a two month period amid accusations by Gucci that the tactics were tantamount to a "creeping takeover." In a bid to counter the stake building, Gucci set up an employee trust with an option to buy 37 million new common shares. Gucci said the trust immediately purchased 20 million shares, equivalent to the stake bought up by LVMH.
LVMH chairman Bernard Arnault said he was hopeful of a speedy resolution to the dispute at the meeting Friday. "We will go there with an extremely open mind. If they are really serious . . . we should be able to find an agreement without too much difficulty," he said.
The most likely resolution will see LMVH take two seats on Gucci's board. Arnault has tried to pacify the Italian company by insisting that he has no intention of launching a takeover bid.
Arnault made his comments as he revealed that LVMH's 1998 net earnings slipped 29 percent to 525 million euros ($577 million). Analysts said the results had come in 10 percent below the consensus at the earnings per share level.
Nevertheless, LVMH's (PMC) stock soared almost 5 percent in Paris to 231.1 euros, after the company delivered an upbeat assessment of current sales and prospects for the remainder of the year. "The company gave a very bullish impression in the analysts meeting," said an analyst at CSFB in London.
LVMH has set itself a target to grow operating income by at least 15 percent in 1999. Last year's operating profit fell 7 percent to 1.18 billion euros.
Investors were further cheered by management, which now appeared "much more focused on internal improvements," the analyst added. LVMH took a 161 million euros one-time charge to cover the restructuring of its DFS duty free business and the wines and spirits group.
The group also announced it had acquired a 24 percent stake in U.S. sportwear maker Gant.