Speculation over the ownership of luxury house of Chanel has intensified since the February death of creative chief Karl Lagerfeld, however it seems that even the world’s largest luxury company thinks a takeover would be too big to swallow.
Chanel is worth nearer to 100 billion euros ($113 billion) than the 50 billion euros that some analysts have estimated, so it’s unclear who might be interested, LVMH managers told analysts at an investor day in Paris this week, according to a note by Jefferies International Ltd. analyst Flavio Cereda. An LVMH spokesman wasn’t immediately reachable.
The comments only add fuel to the fire over the future of Chanel, with owners Alain and Gerard Wertheimer having both reached retirement age. Chanel issued a firm statement in March to halt rumours of a potential sale. Yet the topic hasn’t gone away, with some analysts suggesting that the company’s vast scale may make an initial public offering a more likely exit route.
“Should the owners want an exit strategy — which they often said they don’t — an IPO looks probably a more likely scenario,” said Jelena Sokolova, an analyst at Morningstar Inc. A valuation of 100 billion euros “makes sense,” and means Chanel would be “too big to swallow” even for other luxury players, including Kering SA, Richemont and Hermes International, she said.
From LVMH’s perspective, it may not even need such a deal given it’s developing a “mini-Chanel” of its own “internally” with Christian Dior Couture, according to Cereda of Jefferies.
No other luxury player would want to eat up that cost of purchasing it, and 100 billion dollars is a lot of capital to acquire. Unless the Rothschild’s or Morgan’s want to step in, the Wertheimer’s will have to seek alternatives as to what to do with Chanel if and when they decide to relinquish the company.
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