Enhancement

Case Summary

The case Fashion Faux Pas is about one of the most highly contested takeover battles ever seen in the Europe continent. The central parties involved are Gucci & LVMH and the legal battle between the aforementioned companies in the controlling ownership of Gucci commenced ever since the initial public offering of Gucci. There are questions raised as to whether acquisition of Gucci by LVMH actually benefitted LVMH itself or not. Gucci accused LVMH of creeping acquisition and refus ed to cooperate in LVMH gaining unparallel representation in the management of Gucci.Basic parts of the alleged attempt to absorb and defense mechanisms used by Gucci were the use of poison pills and white knight. Ultimately, Gucci found a white knight, Pinault-Printemps-Redoute (PPR) in France, to save it from unwanted advances to LVMH. It is 2001, and after the end of this fashion war, what needs to be assessed is whether in all this the Gucci shareholders had been winners or losers?

Identification of Problems

1) What defensive hostile takeover strategy should Gucci adopt to combat the battle with LVMH?

2) Is there any other defensive hostile takeover strategy if the current one didn’t serve the purpose.

3) Whatever be the defensive strategy, an issue that will linger on is how to prevent any future takeover of a competitor like LVMH(or be better prepared).

4) What price to negotiate to close out an LVMH shareholding?

5) Whether in all this the Gucci shareholders interests had been overlooked?