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Court renews Gucci tussle
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September 27, 2000: 9:05 a.m. ET
LVMH says legal verdict brings it closer to winning bid battle; PPR rejects claim
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LONDON (CNNfn) - Luxury goods company LVMH Moet Hennessy Louis Vuitton SA claimed Wednesday it had moved a step closer to winning its hostile bid to buy Gucci Group NV, after a court cancelled an earlier ruling that had given one of LVMH's rivals a blocking stake in the Italian fashion house.
LVMH's opponent in the case, French retail heavyweight Pinault-Printemps-Redoute SA (PPR), put a different spin on the Dutch court's latest verdict. PPR last year agreed to buy 42 percent of Gucci for $3 billion to foil LVMH's takeover bid, and said the latest decision didn't affect its deal with Gucci.
The court annulled a previous ruling that had allowed Gucci to fight off LVMH's (PMC) bid. In that May 1999 verdict, a lower court had refused to veto PPR's acquisition of the coveted stake in Gucci. On Wednesday, the Dutch Supreme Court said the lower court should hear the earlier case a second time.
That should lead to the PPR investment in Gucci being cancelled, LVMH said Wednesday. But a Dutch court spokesman was quoted by Reuters as saying the ruling had no immediate effect on PPR and Gucci's agreement. No changes in Gucci's arrangements were expected ahead of a re-hearing of the case by the lower court, the spokesman said.
The decision, based on procedural grounds, "is not on the substance of the case," PPR said.
"Nothing hinders the continued development of the Gucci group. We are therefore extremely confident of the outcome," PPR Chief Executive Officer Serge Weinberg said in a statement.
Gucci welcomed the decision and said PPR's purchase of a stake would stand. Gucci had turned to PPR, one of Europe's biggest retailers and wholesalers, as a white knight to fend off LVMH's hostile takeover bid. LVMH holds a 20.6 percent stake in Gucci, the Amsterdam-listed maker of status-symbol handbags, shoes and clothes.
The battle over control of Gucci pits two of Europe's wealthiest businessmen against each other. LVMH Chairman Bernard Arnault and his family own 47 percent stake in the company that makes Moet et Chandon champagne, a holding worth about  19 billion ($16.7 billion). Against him, PPR founder Francois Pinault's investment firm has a 45 percent stake in the retail giant, valued at more than 11 billion.
Arnault had protested that the PPR arrangement diluted LVMH's 34 percent stake in Gucci to about 21 percent. The deal also denied Arnault representation on Gucci's board. PPR got the right to nominate four of nine board members.
LVMH said it was confident the new round of legal proceedings would "reestablish fairness among Gucci's shareholders."
"We are pleased with this decision," LVMH said. The company said it would refile its case before the lower court to seek an investigation of Gucci's mismanagement and to request the cancellation of PPR's purchase of the Gucci stake.
Shares of LVMH shares rose 2.4 percent to 84.60 in Paris by mid-session Wednesday, giving the company a market capitalization of 41 billion ($36 billion). PPR, worth more than 25 billion, fell 2.6 percent to 198.30. Gucci was up 1.5 percent at 115.90 in Amsterdam. 
--from staff and wire reports
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