The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
LONDON — The Hermes family thinks it has been wronged. But in its fight against an unwanted shareholder, it seems intent on sacrificing the French luxury group’s remaining minority investors.
PARIS – French luxury conglomerate LVMH insists that it was “fully compliant” with French regulations in amassing its surprise stake in iconic luxury house Hermès International. Autorité des Marchés Financiers, the French markets regulator, demands a formal declaration every time an investor crosses a 5 percent threshold in a listed company. Yet the maker of Vuitton bags only disclosed on Oct. 23 that it held 14.2 percent of Hermès — a stake it has since taken to 17.1 percent after settling some derivatives contracts. LVMH says what it did was legal, but this may simply be proof that the rules must change.
There are obvious oddities in LVMH’s announcement that its average acquisition price for the Hermès stake was 80.5 euros a share — a price last seen in March 2009. The stock is currently trading at more than twice that level. Hermès’ controlling family says it still collectively owns 75 percent of the company’s shares, and that no significant family-owned stake was sold to its larger rival.
“Let me in and I might go higher.” That in a nutshell is the message Sanofi-Aventis chief executive Chris Viehbacher is sending Genzyme’s management in making public his $18.5 billion offer to buy the U.S. biotech company. The all-cash structure is intended to show that the French pharmaceuticals group is serious. But the lowball $69-a-share price has failed to move Genzyme’s board. Viehbacher will be hoping that changes — his threat of a hostile bid looks hollow for now.
One of his problems is that the price is hardly going to bowl Genzyme’s shareholders over. Despite amounting to a near-30 percent premium over the undisturbed price before rumours started flying more than a month ago, Sanofi’s offer values its target at about four times sales when biotechs usually go for five or six times.
The fires that are scorching Russia’s earth are of more immediate concern to Vladimir Putin than the situation on world commodity markets. The Russian prime minister’s decision to “temporarily” ban wheat exports is an emergency measure he hopes will help shield his people from food inflation or shortages.
But there’s no doubt it will add to the market distortions and to the panic that has gripped operators in the last weeks, as the extent of the Russian drought became clear. This all adds up to a highly dangerous situation. Wheat markets fundamentals remain sound for this year. But look beyond, and the spectre of a repeat of the great food crisis of 2008 cannot be ruled out.
Economics, rather than politics, will be the main driver of the fight against global warming in 2010.
In 2009, the global recession had a greater impact than all the diplomatic efforts that ended in the Copenhagen flop: energy production hadn’t declined on such a scale since 1981, according to the International Energy Agency (IEA). Here are five economic reasons for the world to become slightly greener in the coming year (just a few of them could be wishful thinking…)