Welcome to the Christian Dior and LVMH conference call. I will now hand over to Mr. Chris Hollis. Sir, please go ahead.
Hello and welcome. I am Chris Hollis, Director of Financial Communications at LVMH. With me today are Florian Ollivier , the CFO of Christian Dior, and Jean-Jacques Guiony, the CFO of LVMH. Thank you for joining us. We have some brief remarks to make about the project that we announced in Paris this morning, and after these remarks, Florian, Jean-Jacques, and I will be able to take your questions. Before I begin, I must remind you that certain information to be discussed on today's call is forward-looking and subject to important risks and uncertainties that could cause actual results to differ materially. For these, I refer you to the safe harbor statement included in our press release.
I'd also refer you to the notice at the top of both the press release and the presentation, stating that these documents are not for publication or release, directly or indirectly, in the U.S., Australia, Canada, Japan, or South Africa. Turning now to this morning's announcement, hopefully you've all had the time to read through the press release issued in both French and English and available on our website, along with the presentation, which we'll be using as a guide for our introductory remarks. The project we announced aims to simplify the Christian Dior LVMH group structures and strengthen LVMH's fashion and leather goods division through an offer by the Arnault Family Group on the Christian Dior shares that they do not hold, and the acquisition of Christian Dior Couture by LVMH.
In summary, this is on slide two of the presentation, you can see the project is made up of two transactions, in the middle, supporting three strategic aims around the side. Firstly, the acquisition by LVMH of Christian Dior Couture, one of the world's most iconic and prestigious brands, would strengthen the fashion and leather goods business group of LVMH. Secondly, the simplification of the group structure, long demanded by the market, such that the Arnault Family Group would have a strengthened position in Christian Dior, whose assets after the transactions would be its 41% stake in LVMH, where all the operational assets of the group would be held. Finally, the Arnault Family Group would reinforce its commitment as a family shareholder. You can see a summary of these contemplated transactions on slide three.
There would be a public offer by the Arnault family group on the Christian Dior shares that it does not own. This offer would take the form of a primary mixed offer of cash and Hermès shares, with the majority in cash. The main offer consists of EUR 172 in cash and 0.192 Hermès shares for each Christian Dior share, representing a 14.7% premium on the last closing share price of Christian Dior, and an 18.6% premium over the one-month volume-weighted average price. The main offer is complemented by two secondary offers for cash only or Hermès shares only, with certain overall limits, which Florian will address later.
The acquisition of Christian Dior Couture by LVMH at a price that reflects an enterprise value of EUR 6.5 billion, or a multiple of 15.6 times EBITDA, that's earnings before interest tax depreciation and amortization, and about which Jean-Jacques will speak later. The boards of directors of Christian Dior and LVMH are unanimously favorable to the respective transactions that concern them. In the diagrams on slide four, you can see how the group structure changes as a result of these operations. Essentially, Christian Dior Couture leaves Christian Dior and is integrated within the LVMH structure. The Arnault family group increases its control over Christian Dior up to 100%, depending on the results of the offer. The key highlights of the project are, for Christian Dior shareholders, the opportunity to sell their shares at an almost 19% premium over its average one-month share price.
For LVMH shareholders, the contemplated transactions present several advantages. The strengthening of LVMH's fashion leather goods division through the acquisition of one of the most iconic and prestigious brands in the world, whose growth prospects remain strong. An accretive impact on earnings per share from the first year. A simplification of the group structures that I mentioned earlier, a greater commitment from the family shareholder. Let me hand over the call to Florian Olivier. The CFO of Christian Dior, who will present the public tender offer by the Arnault family group on Christian Dior shares, after which Jean-Jacques Guiony, the LVMH CFO, will present the details of the acquisition of Christian Dior Couture by LVMH. Florian?
Thank you, Chris. Let me now go over the technical details of the planned tender offer. Let's go on page seven of the presentation. The tender offer will be initiated by Semiramis. Semiramis is a company which is part of the Arnault family group. The offer targets all publicly held shares, which is about 25.7% of the share capital of the company. Taking into account the premium, the offer's total value will represent EUR 12 billion. The main offer is a mixed offer. In other words, it proposes to pay tender shares in both cash and Hermès International shares, precisely EUR 172 in cash and 0.192 Hermès share per Christian Dior share. The Hermès shares, which will be exchanged, are currently held by the Arnault family group. In addition to this main offer, there will be two secondary offers as part of a mix-and-match option.
One which will be cash only, and the second one, which will be Hermès shares only. Precisely 0.56 Hermès share per Christian Dior share. These secondary offers will provide the Christian Dior shareholders with a higher degree of flexibility. It will give them the possibility to opt for either more cash or more Hermès shares within the overall limit of approximately two-thirds of the value in cash and one-third in Hermès shares, based on the share price of Hermès as of yesterday. A reduction mechanism will therefore be put in place to ensure that such overall proportion is respected. In practical terms, that means that the final cash and share allocation of each shareholder will result from both the election that he may make as per the secondary offers, but also from the elections of other shareholders.
Total consideration offered as part of this tender offer is equivalent to EUR 260 based on the Hermès closing share price as of April 24th, yesterday. Share price adjusted for the planned detachment of the balance of the 2016 dividend. This value represents a 14.7 premium over Christian Dior shares less trading price, an 18.6 premium over its one-month VWAP, and a 25.9% premium over its three-month VWAP. It should be noted that the Arnault family group does not intend to implement a squeeze-out at the offer's close, and the offer is conditioned upon the conclusion of the financing and of satisfactory terms by Semiramis, the initiator of the offer, and satisfactory completion of the regulatory process with the French Financial Markets Authority, AMF. Based on this, the filing of the offer should take place in late May 2017, once the two aforementioned conditions are met.
Let's now move on page eight of the presentation. As we indicated before, the offer is based on the net asset value of Christian Dior. This chart highlights the details of the estimated net asset value of Christian Dior. Let's stress that Christian Dior is a pure holding company with two main assets, the 41% stake in LVMH and the 100% stake in Christian Dior Couture. On the left-hand side of the chart, you have the value of the 41% stake in LVMH, based on the three-month VWAP, EUR 40.4 billion, and based on the one-month VWAP, EUR 42.7 billion. To this, we add the value of Christian Dior Couture. The enterprise value is EUR 6.5 billion. This enterprise value is the value which has been used for the price which has been set between for the sale of Christian Dior Couture between Christian Dior and LVMH.
From the value of these two assets, one has to deduct the net financial debt at the level of Christian Dior, EUR 1.5 billion, and other net liabilities of EUR 0.2 billion. That leaves us with a net asset value for the company as a whole, ranging from EUR 45.2 billion, based on the three-month VWAP, up to EUR 47.2 billion, based on a one-month VWAP. Expressed as EUR per share, the NAV of Christian Dior is in a range of EUR 251 to EUR 263. Let's now move on page nine of the presentation, which is an illustration of the terms of the offer. On the left-hand side, you have the offer price of EUR 260, which is made of the cash component, EUR 172, and the equivalent value of the 0.192 Hermès shares, EUR 88.
On the middle of the chart, you have the spot price of Christian Dior as of yesterday night, the one-month average, three-month average, six-month average, and on the right-hand side, you have the NAV per share. What this chart represents is that the 260 offer value is at a significant premium plus 14.7% over the spot share price, then a premium ranging from 32.8%-18.6% over the stock average, depending on the duration over which it was calculated. As you can see, the EUR 260 value is in the higher part of the range of the net asset value, which is between EUR 251 and EUR 263.
In summary, I am now on page 10, the offer by the Arnault Family Group on the Christian Dior shares constitutes an attractive offer in view of the premiums that I just described, in view of the fact that the price being offered is in line with the company's net asset value. This offer also represents a liquidity opportunity to all Christian Dior shareholders without any limits and at a time when the share is trading at all-time highs. Thank you. Let me now pass on to Jean-Jacques.
Thank you, Florian. We will now turn to page 12 with the key terms of the transaction concerning the acquisition by LVMH of Christian Dior Couture. Let me start by indicating the key terms of this transaction. As we have indicated, the enterprise value amounts to EUR 6.5 billion, from which we need to deduct the net financial debt, which will be transferred. It is about EUR 0.5 billion. This enterprise value represents a multiple of 15.6x the last 12 months EBITDA, so earnings before interest, taxes, depreciation, and amortization, a measure which is most commonly used by the market in majority transactions. Christian Dior SE granted us a vendor loan, which will allow us to choose when to refinance this transaction on the market. Obviously, we do not, as of today, anticipate any particular issues in successfully completing this refinancing, but it is better to have flexibility.
The board of directors of both Christian Dior and LVMH are unanimously favorable to this transaction, which I remind you is only a project at this point in time, since, as it is classical in this situation, it is still subject to an information consultation process with the employee representative bodies of Christian Dior Couture, confirmatory due diligence, and the finalization of the legal documentation, and the review of key financial terms by independent experts, and a vote by the board of directors of both Dior and LVMH, as they are regulated related party agreements. As for the public offer, we have quite some work ahead of us and estimate that the transaction will take place early in the second half of this year. Let us now turn to page 12. Sorry, page 13, with a few numbers on Christian Dior Couture.
Over and above the figures that you can read on this slide, I would like to insist on two or three points. One is that Christian Dior revenue will be over EUR 2 billion in 2017. You are aware of how difficult it is to get to the EUR 1 billion threshold, and all the more so for the EUR 2 billion in the luxury domain. Few players are in this group. When one also knows the benefit of scale in our business, whether in terms of marketing or distribution, you can see how this transaction represents a very strategic opportunity for LVMH. Pretty much all the revenues of Christian Dior Couture is generated in its own stores.
Without reaching the perfect model of its future big brother, Louis Vuitton, Christian Dior Couture generates a large part of its revenue in retail, which is not only a profitability factor, but also a measure of the strength of the brand, which, as everyone knows, is much better expressed through this channel. Finally, an EBITDA over the last 12 months of around EUR 420 million, or over 20% of revenue, what I think is another important and symbolic threshold. Turning to page 14, I've already started to express what I think constitutes, in our eyes, the main benefits of Christian Dior Couture for LVMH. I clearly have not insisted on the positioning of Christian Dior Couture in luxury, which, how can I say, is simply incomparable. Christian Dior Couture is one of the most iconic and prestigious brand in luxury.
In luxury, only a few players make it, and there are not many newcomers. What can be said about the high-end of luxury universe, where Christian Dior Couture is positioned, even fewer brands can claim to play in this area. This unique positioning results from a rich heritage and a complex alchemy, which would be pretentious to try to summarize in a few slides. I will, however, mention a few ones, turning to page 14, starting with the obvious. Sorry, 15. Starting with the obvious, which is the Designers, the exceptional designers who have shaped the brand over the decades of its ascent, starting with Mr. Dior, whose name is the world's most well-known French name, who set down some exceptional foundations, followed by others as talented as Yves Saint Laurent, Marc Bohan, or Raf Simons, to mention but a few.
Maria Grazia has today the responsibility of following them, and she does it with great talent. Turning to page 16, discussing a bit the distribution network, which is nothing else but exceptional. It's totally controlled, and the brand has made some considerable investments over the last few years. In total, Christian Dior Couture has 200 stores, all magnificently located, which in some ways is a physical demonstration of the brand's power and a measure of its durability. At LVMH, Christian Dior Couture has purchased the most strategically located stores, and today has a remarkable commercial real estate portfolio. Getting back to the numbers on page 17, which for me are, of course, important. Christian Dior Couture, as you can see from this slide, is a strongly growing business.
Its revenue base has almost doubled since 2011, and its profit from recurring operations, which as you know is our main metric, has been multiplied by three. Concerning the first quarter of 2017, the growth continues with an organic growth of about 17%, slightly better than the fashion and leather division of LVMH. You can also see from the slide that the balance breakdown of revenue, whether by product or geographical zone. Turning to page 18, you will have understood a very strategic acquisition for LVMH and its shareholders. The historic proximity of Christian Dior Couture to LVMH should not lead you to mistake the importance of the transaction for LVMH. We are acquiring an asset that generates EUR 2 billion of revenues, growing with an excellent profitability, and in the highest part of the luxury segment. This is a unique opportunity that should be understood as such.
In addition, this transaction allows the union of the total brand Christian Dior within LVMH, creating a global brand which revenue ranges from EUR 4 billion-EUR 5 billion, which is quite exceptional, with the effect of simplification for which we have been vigilant, which will present many opportunities to further strengthen the power of the brand. I will conclude with slide 19, which describes the impact of the transaction for LVMH. The first indicates the financial impact on our earnings per share. There will be an accretion of the earnings per share of about 3%. The second part of the chart shows the gearing ratio, so net debt to net equity, which obviously increases as 100% of the consideration will be funded through additional debt for LVMH, which stayed at the level of 35%, which is quite favorable. Some other measurement would compare the net debt with EBITDA.
We would be slightly above one year of EBITDA, which is also considered as being fairly favorable. A transaction that will not destroy, far from that, the excellent financial balance of LVMH. I will now turn back to Olivier for a last chart on the timetable.
Yes, a quick word about the indicative timetable. We expect the filing of the offer to take place in late May. We expect to obtain clearance from the AMF, the regulatory body, in June 2017. Once we obtain the clearance, the offer will be immediately launched, the offer will be standing for three weeks. Thank you. Now we can open the call. Gregoire, could you open it up for questions, please?
Yes. Ladies and gentlemen, if you wish to ask a question, please press 01 on your telephone keypad. We have a first question from John Guy from MainFirst. Sir, please go ahead.
Yes. Good morning, Jean-Jacques, Florian, and Chris. Thanks for taking my questions. First question is with regards to any specific tax savings on the collapsing of the structure. The second question is around the cost of debt. I think there's a 24-month vendor loan granted. Could you maybe give us an idea in terms of what the cost of debt is on this? Also with regards to, I guess, the foreseeable margin uplift and synergies, given the strategic optimization on the deal. I've always sort of taken the view that Dior has been a beneficiary of LVMH Group in terms of some of the A&P and the property position that, or the property investments in the way that LVMH Group manages its property portfolio, that Dior's always been a beneficiary of that.
Could you maybe just talk about how you see future margin evolution within Dior, within the LVMH Group specifically? Thanks very much.
Thank you, John. I will respond to the first question. As far as the deal is concerned, it's not a tax-driven transaction, so there is no specific tax savings associated with it.
Okay.
I would say that Christian Dior Couture within LVMH or within Christian Dior will pay the same amount of tax, no particular impact. On your last question, John, the cost of debt on the vendor's loan is 1%. Let me stress, nevertheless, that it's quite theoretical. It's a flexibility, as I said, that we have, that we can pick the best moment for us to fund the transaction on the market. It's not obvious that the vendor's loan will even exist. Maybe we'll be in a position to refinance the transaction before the closing, maybe not. We don't know. In any way, it's 1%. As far as your question on the uplift in margins and synergies are concerned, two different questions in my view. Uplift in margin is the question of the momentum in Christian Dior Couture's margins as of today, which is very significant.
A lot has been done, we expect to do more to improve the margin. The EBITDA margin is quite favorable. The EBIT margin is still a bit low as the cost of capital, the depreciation and amortization line is a bit high, we are going out from a heavy period of capital spending. We expect the margins to continue to improve in the future. As far as synergies is concerned, your comment is right. As much as we can, we benefited, Dior Couture benefited from the help of LVMH. As Mr. Arnault said this morning, obviously not being part of the same legal entity creates some limitations and some constraints that will be lifted by the fact that Christian Dior Couture will now belong to LVMH.
You know that as far as synergy is concerned, we are more talking about doing intelligent things as opposed to be heavy cost cutters. You know that. It's been the case forever, obviously it will not change with the integration of Dior Couture. There is more to be done once Dior Couture belongs to LVMH rather than that was doable in respecting the, I would say, the interest of the respective shareholders of those companies before. There is more to come.
That's very clear, Jean-Jacques. Maybe just one follow-up on the depreciation. You mentioned, I think it's about 7% for Christian Dior, on the couture side. That's obviously reasonably high, you said that there will be opportunities to bring that down within the LVMH group.
Well, a lot has been done in terms of capital spending over the recent years. Progressively, as Christian Dior is no different to LVMH, the depreciation period for stores is mostly six years. As time goes by, the depreciation charge goes down unless there is a big investment program, which won't be the case. The bulk of what had to be done has already been done. You can expect this to go down progressively in the future.
That's very clear. Many thanks to you.
We have another question from Mr. Thomas Chauvet from Citi. Sir, please go ahead.
Good afternoon, everyone. Thank you for taking my question. I have three. The first one on just the rationale. I remember, Jean-Jacques, you said generally, historically, over the last decade, that the status quo on the LVMH Dior structure was preferable, maybe things would change at some point in the future. What has changed over the past few months, over the past year, that triggered this transaction? Just an aside, in light of the French political agenda, are you of the view that the deal was going to happen irrespective of the outcome of the first round or the second round of their presidential election? Secondly, on the integration of Dior Couture within LVMH, can you elaborate on what will be the main operational changes, just from maybe merging or integrating couture and parfum activity, and the timing of these changes? Are these significant changes?
Obviously, very different activities and distribution channels. Finally, on M&A, in terms of the big maneuver, the grand maneuver in the luxury sector, does this transaction mean that you're effectively completely exiting Hermès, abandoning your past views on Hermès? You're adding an interesting sizable fashion brand to the portfolio, therefore making perhaps a pause in terms of M&A. The market has been speculating that you might have an interest in watches and jewelry asset. People talked about Tiffany, especially since the departure of Frédéric Cumenal and the appointment of Mr. Trapani, whom you know well, at the board of Tiffany. Thank you.
Okay. Thank you, Thomas. You don't really expect answers, do you? Let me try to give you some hints on the various points. On the status quo, which is preferable to moving, I always said, when you ask me this question, which you did, I have to admit, a few times already, that the decision is within the Arnault family's hands. What has changed is that they have decided that it would make sense, given the rest of the transactions taking place, to invest EUR 12 billion of their private money into further consolidating their presence into LVMH. That's a major decision and a major commitment, and a major proof of faith and confidence for the future. That's the big difference in my view. The election had nothing to do with all that.
I don't know what would have happened if the result of the election had been different. This is science fiction, or past science fiction as I'm concerned, I will not comment on this. On the integration of Dior Couture, what type of operational changes will take place, I would say that, as I alluded to before, we are not big believers in heavy synergies, not a lot will take place. As I suggested, we will integrate further Christian Dior Couture into all the monitoring of the retail presence of the group. We will make sure that all the media purchases are being done centrally as it is the case for the rest of LVMH. The funding of Christian Dior Couture will benefit from the favorable condition that LVMH can borrow to. Basically, Christian Dior Couture will be funded by LVMH once the transaction is completed.
Non-strategic purchases will be done in collaboration with LVMH, which is not the case today, et cetera. We'll implement all the synergies that we implement within LVMH with Christian Dior Couture, but don't expect major upheaval and changes within Christian Dior stemming from this. Finally, your question on M&A and exiting Hermès. I have to say that we exited Hermès already two years ago. If you remember, we dividended out the shares of Hermès to Christian Dior and the other shareholders, and in turn, Christian Dior dividended out the shares of Hermès to their own shareholders. As far as we are concerned, we, meaning LVMH, Hermès is history, and it's clear that the Arnault family decided to swap their financial investment into Hermès for a more strategic investment into LVMH. That's all I can say on this.
As far as other targets for LVMH are concerned, as I said, you don't really expect me to answer, do you?
I don't, Jean-Jacques. Thank you.
Next question for Mr. Antoine Belge from HSBC. Sir, please go ahead.
Hi, it's Antoine Belge, HSBC. Three questions from my part. First of all, regarding the store network of Christian Dior Couture, roughly 200 units. I think you said most of the CapEx investment had been done. Maybe it strikes me as Dior still probably having maybe a bit more potential than other brands. What type of number of store opening could we see in the next three years? Second question is relating maybe to your thinking about share buybacks. I remember last year there was a bit of a misunderstanding in the financial community, maybe expecting more than the EUR 300 million you did. Actually you had already in mind that the deal that is announced today, could you maybe refresh the thinking around returning cash to shareholder after what is happening today?
Finally, just a confirmation that after the deal, the total holding in LVMH from the Arnault Family Group will be pretty much unchanged.
You had two questions. I am surprised. You usually have three.
Yes.
No, I just got two. Store opening and share buyback. One on the Okay.
Yes.
On store opening, not much. Frankly, we have a plan with not many store openings, but a few of them. The key question for Christian Dior Couture is now to consolidate what they have. They opened a pretty large store, as you have read in the press not far ago, last week in Tokyo, which is a pretty sizable store, and it's really about developing the business into existing stores much more than opening new ones. As far as share buyback is concerned, let me remind you what I said consistently over the last year, is that we wanted to end the year with an amount of debt which was consistent with what it was at the end of the year.
We ended the year with EUR 3.2 billion in debt, where you should add EUR 650 million for the acquisition of Rimowa and EUR 200 million almost for the exercise of the put option from PG Loro Piana. That makes EUR 400 million pro forma by the end of last year, which is exactly the amount of debt that we had at the end of 2015. Our share buyback program was exactly commensurate with our objectives, and obviously, we did not have in mind this deal. I will hand over to Florian on the family shareholding. Yes, Antoine, as far as the interest of the Arnault Family Group in LVMH is concerned, currently it represents a little more than 36%. The Arnault Family Group has a direct interest in LVMH of a little bit in excess of 5.5%, plus the indirect interest through Christian Dior, which owns 41% of LVMH.
Assuming the tender offer, which is a success of 100%, our economic interest in LVMH will move up, it will move up from around 36% to 46, a little more in excess of 46%. It will be an increase of a little more than 10% in economic interest, depending, of course, on the outcome of the tender offer.
Maybe a follow-up on that. In terms of voting rights, any implication from the deal?
Well, as you know, the Arnault Family Group has already more than 50% of voting rights in LVMH. Very precisely, it's 62%. It's not going to change anything from this standpoint.
Thank you. We have another question from Hermine de Bentzmann from Raymond James. Madam, please go ahead.
Good morning. Thank you for taking my question. I just have two quick questions. The first one is on the EUR 6.5 billion of enterprise value for Dior Couture. Can you give us the real estate amount? The second question is on the dividend policy of LVMH. Do you plan any change in your dividend policy following this simplification of structure? Thank you.
Thank you, Hermine. No, the dividend policy will be unchanged, which means that we'll keep on focusing on increasing regularly the dividend in a way which is commensurate to the increase in the cash flow and the net profit. That's the global dividend policy of LVMH, and we don't intend to change it. As far as the EUR six and a half billion is concerned and the real estate share, the EUR six and a half is a transaction value, not a net asset value. We don't divide it into real estate on the one side and operational value on the other side. The way real estate plays in this value is that as far as some pieces of properties are fully owned by Christian Dior Couture, this enables a saving on the rent side.
The rent savings is therefore multiplied by the capitalization rate, whatever it is, 15 times for EBITDA, as I mentioned before. That gives you a sort of financial value for the real estate. Usually, the real estate value from a pure property viewpoint is higher than that, but it has not been explicitly taken into account in the valuation of Christian Dior Couture. The answer to your question is that most of the real estate value of Christian Dior Couture is captured through the savings of rents that enables a higher profit than it would be otherwise.
Okay. Thank you.
We have another question from Claire Dumont from CACIB. Madam, please go ahead.
Yes, good morning. I had a quick question regarding Christian Dior bonds. You have two bonds outstanding for Christian Dior. I understand they will be pushed into LVMH, but can you please elaborate on how it is technically possible, please?
No, the bonds are not at the level of Christian Dior Couture, they are at the level of Christian Dior, therefore there is no change as far as these bonds are concerned.
Christian Dior will be like an empty holding now with no assets anymore.
Not really, because the major parts of the assets of Christian Dior will still be there. It's a 41% interest in LVMH.
The bond will remain at the holding level.
Absolutely.
Okay.
Indeed, just as Jean-Jacques is reminding me, the stake in LVMH is worth in excess of EUR 40 billion. Christian Dior is-
Pretty good for an empty company.
Yeah. Okay, thank you.
We have another question from Mario Ortelli from Bernstein. Sir, please go ahead.
Good morning, sirs. The first question is about the real estate at Dior. In your holding, will remain any piece of real estate, or all the current real estate of your holding is under the name of Dior Couture and so will enter in LVMH? The second question is about possible changing in management at Dior. Now that Dior is a part of LVMH, are you thinking to, I would say, switch, to move some of the managers of Dior into other brands of LVMH and vice versa, to try to exploit best practice sharing and other activities on that? Thank you.
First of all, there was no real estate at the level of the company, Christian Dior SE. There won't be any change from this standpoint. All the real estate related to Christian Dior is part of the overall Christian Dior branch, and will move down to LVMH.
Mario, your question on the changes in management. Bernard Arnault confirmed this morning that there is nothing contemplated in terms of management changes. I think Dior has a great management, and it's not anticipated that there will be any meaningful changes there. This being said
Over the long term, Christian Dior will be part of the global HR policy of LVMH, and there could be moves in between. People from ex LVMH moving into Christian Dior and vice versa, but that's a normal mobility policy that has been spearheaded by the HR division for all the LVMH companies, so nothing specific there.
Thank you.
We have another question from Mr. Oliver Gleason from Investec. Sir, please go ahead.
Hi, good morning. Just three technical questions about the offer. The first one is, you mentioned the overall cap of EUR 8 billion of cash and 8.9 million shares. If only a portion of the CDI shareholders accept this offer, does that give them greater flexibility with respect to the secondary offers, or would those caps of EUR 8 billion and 8.5 million shares also be reduced accordingly? Second question I had is whether the CDI offer and the Dior Couture offer from LVMH are interconditional in any way, or could either offer go ahead if the other transaction does not proceed? The third question I had is whether Christian Dior has any plans for the eventual cash proceeds from the couture sale. Thank you.
Okay. Thank you very much. The first question relates to the proportion between Hermès shares and cash as far as the secondary offers are concerned. The answer is no. I.e., even if the tender offer doesn't reach a 100% target, we will need to abide by the initial proportion of approximately two-thirds, one-third. It's not going to change anything. As far as the conditionalities concerned, as we indicated, the sale of Christian Dior Couture to LVMH is conditioned upon the tender offer receiving the approval from the AMF. As far as the third question relates to the cash proceeds from the sale of Christian Dior Couture. First of all, we don't know exactly when the cash proceeds will be received. Once we receive the cash proceeds, then we'll decide what we do with it, depending, of course, on the outcome of the tender offer.
Okay, thank you.
We have another question from Samantha Tobefitch from Deal Reporter. Madam, please go ahead.
Hi, thank you. I was just looking for confirmation. Is there any external financing regarding the cash component? If so, could you give us the names of the banks that you're speaking to at the moment?
Yes. As far as the financing of the transaction is concerned, the timing of the transaction is such that no financing has been secured by the Arnault Family Group at this stage. Given the financial strength and the financial scope of the Arnault Family Group, the Arnault Family Group feels very confident about its ability to obtain all the financing necessary for this transaction.
That will include external financing, it's not just existing cash resources being used?
Absolutely. It will include external financing.
Okay. You're already in conversation with banks on that?
Well, we've started discussions with banks because, as I indicated before, we didn't contact banks before the announcement of the project. It's only starting from now that we'll be talking to banks. We have received already quite a number of phone calls.
Okay, thank you.
We have another question from Ben Wall from Tavira. Sir, please go ahead.
Thank you very much. My question was actually to do with the cash proceeds that were going to be received by Christian Dior and what your plans were, I believe that question was already asked. Is it correct that there are currently no plans?
This is correct. No decision has been made yet. Decision will be made once we receive the proceeds. The decision which will be made will, of course, be dependent upon the outcome of the tender offer.
There is potential for that to be dividended out, no?
It's indeed one of the options.
Okay, thank you.
We have another question from Julian Easthope from Barclays. Sir, please go ahead.
Yeah, thank you. Good afternoon, everyone. You said that you would not squeeze the deal if you didn't get a full 100% of the tender offer through. I just wonder why not. Surely, isn't that in your best interest to have full control over Christian Dior, or the family to have full control over Christian Dior? Cheers.
Well, let's be very precise. What the Arnault Family Group did say is that it did not intend to launch, to implement, to squeeze out in the period following the close of the transactions, i.e., we are talking about the three-month period following the transaction. As far as the intent of the Arnault Family Group beyond this three-month period, it's a point which has not been disclosed yet, and I suppose it will be part of the prospectus, which will be filed in the course of May.
Okay. Thanks for the clarification.
We have another question from Leopold Authié from Oddo. Sir, please go ahead.
Yes. Thanks for taking my question. Just a precision, basically. Do you have the right at Dior level to only have LVMH shares? Because I would have thought that you were forced to have at least two assets there. Just trying to understand if actually you can live with only 41% of LVMH at Dior.
I don't know which rule you are referring to.
It seemed to me that at the beginning when the whole structure was made, you needed to have more than one asset in Christian Dior, but maybe I'm wrong.
The logic is to have more than one, there is no particular rule that obliges a company to diversify from its main asset in any way. If you look at Dior right now, the shareholding in LVMH is obviously much more valuable than the shareholding in Dior Couture. By the way, after the transaction, as Florian told you, there will be two assets. One will be the 41% shareholding in LVMH, and the other one will be EUR six and a half billion in cash, or a credit note on LVMH as long as it isn't paid.
All right. Thanks.
Thanks, Leopold. Okay, I think there are no more.
We have no other question.
No other question. Okay. Thank you so much for attending this call.
Thank you very much.
Have a good day. Bye-bye now.
Thank you.
Ladies and gentlemen, this concludes the conference call. Thank you all for your participation. You may now disconnect.