Secret LVMH deal over Hermès shares revealed

Luxury giant LVMH signed a secret agreement in 2002 to acquire shares in rival fashion house Hermès from family heir Nicolas Puech and other members of the founding family, according to legal documents reviewed by Reuters.

The agreement has emerged amid a legal dispute over Puech’s missing fortune. The Hermès heir has alleged that his 6 per cent stake in the company disappeared through a scheme involving his late wealth manager, Eric Freymond.

Puech’s stake would be worth billions of dollars at current market prices. He has filed legal action seeking substantial damages from those who may be found responsible for the alleged loss.

LVMH has denied deliberately seeking to acquire Puech’s shares against his wishes. In a court filing in June, the company said it had never planned to acquire the heir’s stake.

However, documents reviewed by Reuters indicate that LVMH representatives signed a 2002 agreement with Freymond, who managed Puech’s wealth and had connections with other Hermès shareholders.

The agreement called for LVMH to purchase millions of Hermès shares from Puech and other heirs. It was signed on November 12, 2002, during LVMH’s efforts to build a significant position in its French luxury rival.

Legal documents also show that LVMH and a holding company linked to chairman Bernard Arnault’s family paid Freymond’s management firm at least $20 million in fees and commissions between 2001 and 2009.

The payments were connected to Freymond’s work in helping LVMH acquire Hermès shares, according to documents filed in a separate Swiss legal case.

The relationship between LVMH and Freymond began in 2001. Swiss lawyer Alexandre Montavon helped introduce Freymond to Pierre Godé, a senior adviser to Arnault.

According to Montavon’s testimony to French prosecutors, Freymond had access to Hermès shareholders who were considering selling their stock. He allegedly proposed using Puech’s accounts as an intermediary to conceal LVMH’s involvement because some family shareholders might have been unwilling to sell shares directly to a rival.

Montavon told prosecutors that transactions were carried out through Puech and financed by LVMH.

LVMH said in an earlier Swiss court filing that it had accumulated a 4.9 per cent stake in Hermès by 2002 with Freymond’s assistance.

The 2002 agreement was later put on hold, according to LVMH, because the company could not establish whether Freymond had the authority to sell Puech’s shares. LVMH has said the agreement was never executed and that it never instructed Freymond to implement it.

The company also said the agreement was destroyed in late 2010, the same year it publicly disclosed a 17 per cent stake in Hermès.

LVMH eventually built its Hermès holding to about 23 per cent before agreeing in 2014 to sell its stake as part of a settlement that ended the bitter dispute between the two luxury groups.

The fate of Puech’s shares remains unclear. Puech has said he only discovered that his stake was missing in 2022 after ending his relationship with Freymond.

French prosecutors are investigating the circumstances surrounding the disappearance of the shares. The investigation has also examined the role of Montavon, although no criminal charges have been filed against him.

Montavon has denied wrongdoing. His lawyer said he was never aware at the time that LVMH had acquired shares belonging to Puech.