4.45 billion bonds: LVMH is preparing to buy Dior. What if that was not enough?

The acquisition of the Dior group would also be financed with debt lines. The LVMH group enters the bond market for 4.5 billion. (According to the first estimates, the cost of the operation should go around 6.5 billion euros). Bonds will be divided into four tranches with maturities of 18 months, 3, 5 and seven years. According to Reuters, the deal stipulates that LVMH may redeem bonds if the merger is not finalised, or if it does not occur by March 2018. The Wall Street Journal questions the feasibility of the acquisition as designed by Bernard Arnault. A few weeks after the announcement of the plan, some critical issues have emerged. First of all, the method employed by the French colossus patron to fix the value of the shares of the three holdings involved (Dior, LVMH and Hermès, of which Arnault still has a stock he wants to get rid of) leads to an underestimation of the Dior title. The announcement of the plan prompted a devaluation of the Hermès title to the growth of that LVMH. The result is that Arnault may find himself having to revisit the financial values of his project.


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