Welcome to the Christian Dior and LVMH Conference Call. I will now hand over to Mr. Chris Horne. Sir, please go ahead.
Hello, and welcome. I am Chris Hollis, Director of Financial Communications at LVMH. And with me today are Florian Olivier, the CFO of Christian Dior and Jean Jacques Guinee, the CFO of LVMH. Thank you for joining us. Now we have some brief remarks to make about the project that we announced in Paris this morning.
And after these remarks, Chogyal, Jean Jacques and I will be able to take your questions. But 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also refer you to the notice at the top of both the press release and the presentation stating that these documents are not for publication or release directly or indirectly in the U. S, Australia, Canada, Japan or South Africa.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 will 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 Arnaud 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 2 of the presentation. You can see the project is made up of 2 transactions in the middle supporting 3 strategic aims around the side.
Firstly, the acquisition by LVMH of Christian Dior Couture, one of the world's most iconic and prestigious brands with strength in the Fashion and Other Goods Business Group of LVMH. And secondly, the simplification of the group structure long demanded by the market such that the Arnaud 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. And finally, the Anoat Family Group would reinforce its commitment as a family shareholder. You can see a summary of these contemplated transactions on Slide 3. Firstly, there would be a public offer by the Arano 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 Hermes shares with the majority in cash. The main offer consists of EUR 172 in cash and EUR 0.192 Hermes shares for each Christian Dior share, representing a 14.7% premium on the last closing price share price of Christian Dior and a 18.6% premium over the 1 month volume weighted average price. The main offer is complemented by 2 secondary offers for cash only or home is shares only with certain overall limits, which Florian will address later. Secondly, the acquisition of Crescendo Couture by LVMH at a price that reflects an enterprise value of €6,500,000,000 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 4, 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. And the Arnaud family group increases its control over Christian Dior up to 100% depending on the results of the offer. So 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 1 month share price. And for LVMH shareholders, the contemplated transactions present several advantages.
The strengthening of LVMH's Fashion Leather Goods division through the acquisition of 1 of the most iconic and prestigious brands in the world whose growth prospects remain strong and accretive impact on earnings per share from the 1st year, a simplification of the group structures that I mentioned earlier and a great commitment from the family shareholder. Now let me hand over the call to Troy Olivier, the CFO of Christian Dior, who will present the public tender offer by the Arnaud Family Group on Christian Dior shares, after which Jean Jacques Guillenie, the LVMH CFO, will present the details of the acquisition of Christian D'Acouture by LVMH. Florian?
Thank you, Chris. Let me go let me now go over the technical details of the planned tender offer. Let's go on Page 7 of the presentation. The tender offer will be initiated by Semiramis. Semiramis is a company which is part of the Arnaud Family Group.
The offer targets all publicly held shares, which is about 25.7 percent of the share capital of the company. Taking into account the premium, the offer's total value will represent €12,000,000,000 The main offer is a mixed offer. In other words, it proposes to pay tender shares in both cash and Hermes International shares, precisely €172 in cash and €0.192 Hermes share per restorpe share. The Hermes' shares, which will be exchanged, are currently held by the Arnaud Family Group. In addition to this main offer, there will be 2 secondary offers as part of the mix and match option, one which will be cash only and the second one, which will be Hermes shares only, precisely 0.56 per Crescendo share.
These secondary offers will provide the Crescendo shareholders with a higher degree of flexibility. It will give them the possibility to opt for either more cash or more Hermes shares within the overall limit of approximately 2 thirds of the value in cash and 1 third in Hermes shares based on the share price of Hermes 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 you 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 €260 based on the Hermes causing share price as of April 24 yesterday, share price adjusted for the planned detachment of the balance of the year 2016 dividend.
This value represents a $14,700,000 premium of Aker Soldier's shares less trading price, an 18.6% premium over its 1 month VWAP and a 25.9% premium over its 3 month DRAM. It should be noted that the Ardo family group does not intend to implement a squeeze out at the office close, and the offer is conditioned upon the conclusion of the financing and of satisfactory terms by Semi Armies, the initiator of the offer, and satisfactory completion of the regulatory process with the French Financial Markets Authority, I. E. AMF. Based on this, the filing of the offer should take place in late May 2017 once the 2 aforementioned conditions are met.
Let's now move on Page 8 of the presentation. As we indicated before, the offer is based on the net asset value of Cristiano Dior. This chart highlights the details of the estimated net asset value of Preciseur Dior. Let's stress that Preciseur Dior is a pure holding company with 2 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 3 month VWAP EUR 40,400,000,000 and based on the 1 month VWAP EUR 42,700,000,000 To this, we add the value of Christian Dior Couture.
The enterprise value is €6,500,000,000 This enterprise value is the value which has been used for the price which has been set between for the sale of Closter Georgiou, between Closter Georgiou and LVMH. From the value of these two assets, one has to deduct a net financial debt at the level of Christian Dior 1,500,000,000 and other liabilities, net liabilities of EUR 200,000,000 that leaves us with a net asset value for the company as a whole ranging from €45,200,000,000 based on the 3 month VWAP up to €47,200,000,000 based on the 1 month VWAP Expressed as euro per share, the NAV of Christian Dior represents the range is in the range of 2 €51 to €263 Let's now move on Page 9 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 EUR 0.192 Hermes shares, EUR 88. And on the middle of the chart, you have the spot price of Castiglione as of yesterday night, the 1 month average, 3 month average, 6 month average and on the right hand side, U.
S. NAV per share. What this chart represents is that the $260 offer value is at a significant premium plus 14.7 percent over the spot share price and then premium ranging from 32.8% to 18.6% of the stock average depending on the duration of the over which it was calculated. And as you can see, the EUR 260 value is in the higher part of the range of the net asset value, which is between €2.51 2.63
In summary, and I'm now
on Page 10. The offer by the Alamo Family Group and the Clotilde of shares constitutes an attractive offer in an attractive offer in view of the premiums that I just described and due of the fact that price being offered is in line with the company's net asset value. This offer also represents liquidity opportunity to all the Christian 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 Georgak.
Thank you, Florian. So I will we will now turn to Page 12 with the key terms of the transaction concerning the acquisition by VMH of Christian Jour Couture. So let me start by indicating the key terms of this transaction. As we have indicated, the retained the enterprise value amounts to €6,500,000,000 for from which we need to deduct the net financial debt, which will be transferred. It's about €500,000,000 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 SC granted us a vendor loan, which will allow us to choose when to refinance this transaction on the market. Obviously, we do not today as of today anticipate any particular issues in successfully completing this refinancing, but it's better to have flexibility. The Board of Directors of Christian Dior, both Christian Dior and RVMH 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 the 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 RVMH as they are regulated related policy 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's now turn to Page 12 with a few 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 2 or 3 points. One is that cashier revenue will be over €2,000,000,000 in 2017. You are aware of how difficult it is to get to the €1,000,000,000 threshold and also more so for the €2,000,000,000 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 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 with 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 €420,000,000 or over 20% of revenue, but 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 Georg Couture for LVMH.
I clearly have not insisted on the positioning of Christian Jour Couture in Luxury, which I'm going to say simply incomparable. Christian Dior Couture is one of the most iconic and prestigious brand in Luxury. In Luxury, only few players make it and there is there are not many newcomers. What can be said about the high end of Luxury universe where Casa de la 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 Ita Saint, 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 Boulan or Marc Simmons to mention
but a
few. Maria Garcia 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 Jococcur has 200 stores, all man efficiently located, which in some ways is a physical demonstration of the brand's power and a measure of its durability.
As of the MH, Christian Jean 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. Tristan Bercouture, 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 3.
Concerning the Q1 of 2017, the growth continues with an organic growth of about 17%, slightly better
than the Fashion and Leather division of our Image.
You can also see from the slide that the balance breakdown of revenue, whether by product or geographical zone. Turning to Page 18. June. It is, therefore, you have understood a very strategic acquisition for LVMH and its shareholders. The historic proximity of Christian D'Alcouture to LVMH should not lead you to mistake the importance of the transaction for our VMH.
We are acquiring an asset that generates €2,000,000,000 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 Vohr within our VMH, creating a global brand, which revenue ranges from €4,000,000,000 to €5,000,000,000 which is quite exceptional, with the effect of simplification for which we have been vigilant, but which represent many opportunities to further strengthen the power of the plant. 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 earning 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, but which stays at the level of 35%, which is quite favorable. Some other measurements will compare the net debt with EBITDA. We would be slightly above 1 year of EBITDA, which is also considered as being fairly favorable. So a transaction that will not destroy the far from that, the excellent financial balance of RBMH.
And I will now turn back to Provian for a last chart on the timetable.
Yes. So quick word about the indicative timetable. We expect the filing of the offer to take place in late May, and 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 and the offer will be standing for 3 weeks.
Thank you. Now we can open the call. Benoit, could you open it up for questions, please?
We have a first question from John Guy from MainFirst. Sir, please go ahead.
Yes. Good morning, Jean Jacques, Florent 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? And also with regards to, I guess, the foreseeable margin uplift in 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 and P and the property position that or the property investments in the way that LVMH Group manages its property portfolio that deal has always been a beneficiary of that. So 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'll 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.
And I would say that Christian Dior Couture within LVMH or within Christian Dior will pay the same amount of tax. So 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. So flexibility, as I said, that we have so that we can pick the best moment for us to refund the transaction on the market.
It's not obvious that the vendor's loan will even exist. I mean, 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, I mean, 2 different questions in my view.
Uplift in margin is the question of the momentum in Christian Dior's Couture's margins as of today, which is very significant. We expect a lot has been done, but we expect to do more to improve the margin. The EBITDA margin is quite favorable. The EBIT margin is a bit is still a bit low as the cost of capital, so the depreciation and amortization line is a bit high. So we are going out from a heavy period of capital spending, but we expect really 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 I mean, Dior Couture benefited from the help of our VMH. But as Mr. Arnaud 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 12 EMH. So you know that as far as synergy is concerned, we are more talking about doing intelligent things as opposed to the heavy cost cutters.
You know that. I mean, it's been the case forever. And obviously, it will not change with the integration of your Couture. But there is more to be done once your Couture belongs to RVMH rather than that was doable in respecting the, I would say, the interest of the respective shareholders of those companies before. So 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. So on the Couture side, so that's obviously reasonably high. And you said that there will be opportunities to bring that down within the IVMH group.
Well, a lot has been done in terms of capital spending over the recent years and progressively as Casa D'Ovo is no different to ORVMH. I mean, the depreciation period for stores is mostly 6 years. And as time goes by, I mean, the depreciation charge goes down unless there is a big investment program, which won't be the case. I mean, the bulk of what has to be done has already been done. So 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 3. The first one on just the rational, I remember Jean Jacques, you said generally historically over the last decade that the status quo on the LVMH geo structure was preferable. Maybe things would change some point in the future.
So what has changed over the past few months, over the past year that triggered this transaction? And just 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 2nd round of the presidential election? Secondly, on the integration of Diocchio within LVMH, Can you elaborate on what will be the main operational changes just from maybe merging or integrating Couture and Parfums activity and the timing of these changes? Are these significant changes? Obviously, very different activities in distribution channels.
And finally, on M and A in terms of the big maneuver, the Grand maneuver in the luxury sector, does this transaction mean that you're effectively completely exiting Hermes, abandoning your past views on Hermes? You're adding an interesting sizable fashion brand to the portfolio, therefore, making perhaps a pause in terms of M and A. The market has been speculated that you might have an interest in watches and jewelry asset. People talked about it, Tiffany, especially since the departure of Frederic Keminal and the appointment of Mr. Cioppani, 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 asked me this question, which you did, I have to admit a few times already, that the decision is within the Arnaud family's hands.
So what has changed is that they have decided that it would make sense, given the rest of the transactions taking place, to invest €12,000,000 €12,000,000,000 of euros of their private money into further consolidating their presence into LVMH. So 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 have 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. So I will not comment on this. On the integration of your 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. So not a lot will take place, but 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 our V and H. The funding of Christian Dior Couture will benefit from the favorable commission that LVMH can borrow to. So basically, Christian Jococcur will be funded by LVMH once the transaction is completed. Purchases, nonstrategic purchases will be done in collaboration with LVMH, which is not the case today, etcetera, etcetera. So we'll implement all the synergies that we implement within our VMH with Christian Dior Couture, but don't expect major upheaval and changes within Christian Dior standing from this.
Finally, your question on M and A and exiting Hermes. I have to say that we exited Hermes already 2 years ago. If you remember, we the shares of Hermes to Christian Dior and the other shareholders. And in turn, Christian Dior dividend out the shares of Hermes to their own shareholders. So as far as we are concerned, we meaning our village, it's Hermes is history, and it's clear that the family, the Arnaud family, decided to swap their financial investment into Hermes for a more strategic investment into IVMH.
That's all I can say on this. As far as all the targets for RVMH are concerned, as I said, you don't really expect me to answer, do you?
I don't want, Jose. Thank you.
Next question from Mr. Antoine Belge from HSBC. Sir, please go ahead.
Hi, it's Antoine at HLBC. Three questions from my part. First of all, regarding the network of Christian Del Couture, roughly 200 units. I think you said most of the CapEx investment had been done. But maybe it strikes me as you are still probably adding maybe a bit more potential than other brands.
So what type of number of store opening could we see in the next 3 years? And second question is relating maybe to the you're thinking about share buybacks. I remember last year, there was a bit of a misunderstanding in the financial community, maybe expecting more than the €300,000,000 you did. Maybe actually you had already in mind that the deal that is announced today. So maybe refresh thinking around returning cash to shareholder with after what is happening today?
And finally, just a confirmation that the after the deal, so the direct sorry, the total holding in LVMH from the Arnaud family group will be pretty much unchanged?
So you had 2 questions. I'm surprised. I mean, you usually have 3. No, I just got 2, Store Upon YING and the share buyback.
And you want on the okay.
So on
store opening, not much. Frankly, we have a plan with not many store openings. A few of them, the key question for Christian Georg Couture is now to consolidate what they have. They opened a pretty large store, as you've 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 up 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 €3,200,000,000 in debt, where you should add €650,000,000 for the acquisition of Removar and €200,000,000 almost for the exercise of the put option from PG Europeana. So that makes €400,000,000 pro form a by the end of last year, which is exactly the amount of debt that we had at the end of 2015. So our share buyback program was exactly commensurate with our objectives. And obviously, we did not have in mind this deal.
And I will hand over to Florian, the family shareholding.
Yes. So to a nice point, the interest of the Arnaud family group in LVMH is concerned, it's currently it represents a little more than 36%. The Arnaud 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%.
So 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. I mean, in terms of voting rights, any implication from the deal?
Well, as you know, the Arnaud family group has already more than 50% of voting rights in LVMH, very precisely, it's 62%. So it's not going to change anything from this standpoint.
Time.
We have another question from Hermine De Wetzman from Raymond James, Madeline. Please go ahead.
Good morning. Thank you for taking my question. I just have two quick questions. The first one is on the €6,500,000,000 of enterprise value for Dier Couture, can you give us the real estate amount? And the second question is on the dividend policy of LVMH.
Do you plan any change in your dividend policy following simplification of structure?
Thank you, Armin. 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 coming straight to the increase in the cash flow and the net profit. So that's the global dividend policy of our VMH, and we don't intend to change it. As far as the €6,500,000,000 is concerned and the real estate share, it's not an I mean, the €6,500,000 5 is a transaction value, not a net asset value. So 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 saving on the rent side. So 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 value 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. So 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.
We have another question from Claire Dumont from CACIB. Madam, please go ahead.
Yes, good morning. I had a quick question regarding Christian Dior bond. So you have 2 bonds outstanding for Christian Dior. So I understand there will be a push into LVMH, but can you please elaborate on how it is technically possible, please?
No, no. The bonds are not at the level of Christian Dior Couture, they are at the level of Christian Dior. And therefore, there is no change as far as these bonds are concerned.
Yes. But Christian Georges will be like a 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.
Okay. So the bond will remain at the holding level?
Absolutely. And indeed, the just as Jean Jacques is reminding me, I mean, the stake in LVMH is worth in excess of EUR 40,000,000,000. So That's
good for an MT company.
Yes. Okay. Thank you.
We have another question from Mario Roselli from Bernstein. Sir, please go ahead.
Good morning, sir. The first
question is about the real estate at Dior. In Dior Holding, will you remain any piece of real estate or all the current real estate of Dior Holding is under the name of Dior Couture and so will enter in early and age? 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 LVNH 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. So there won't be any change from this standpoint. Also, real estate related to Christian Dior is part of the overall Christian Dior branch and will move down to LVMH. And Mario, your question on
the changes in management. Mr. Arnott confirmed this morning that there is nothing contemplated in terms of management changes. So I think you are the 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 RVMH, and there could be moves in between, I mean, people from ex RVMH 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 AV MH companies.
So nothing specific there.
Thank you.
We have another question from Mr. Olivier Gleeson from Investec. Sir, please go
ahead. Hi, good morning. Just 3 taking my questions about the offer. The first one is, you mentioned the overall cap of €8,000,000,000 of cash and 8,900,000 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 8,000,000,000 and 8,500,000 shares also be reduced accordingly? And 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 Chris and Dior has any plans for the eventual cash proceeds from the Couture sale?
Okay. Thank you very much. The first question relates to the proportion between Hermes 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 100% target, we will need to abide by the initial proportion of approximately 2 thirds, 1 third.
So it's not going to change anything. As far as the conditionality is concerned, as we indicated, the sale of Trastard D'Or Couture to LVMH is conditioned upon the tender offer receiving the approval from the AMF. And as far as and third question relates to the cash proceeds from the sale of Castigl Couture. Well, first of all, we don't know exactly when the cash proceeds will be received. But 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.
We have another question from Samantha Tobowicz from DealReporter. Madam, please go ahead.
Hi, thank you. I was just looking for confirmation. Is there any external financing regarding the cash component? And if so, could you give us the names of the banks that you're speaking to at the moment?
Yes. As far as financing of the transaction is concerned, the timing of the transaction is such that no financing has been secured by the Arnaud family group at this stage. But given the financial strength and the final scope of the Arnaud family group, the Arnaud family group feels very confident about its ability to obtain all the necessary financing the financing necessary for this transaction.
And that will include external financing. So it's not just existing cash resources being used?
Absolutely. It will include external financing.
Okay. So you're already in conversation with banks on that?
Well, we have started discussions with banks because as I indicated before, we didn't contact banks before the announcement of the project. So it's only starting from now that we'll be talking to banks, but we have received already quite a number of phone calls.
Okay. Thank you.
We have another question from Ben Wall from Tevera. Sir, please go ahead.
Thank you very much. My question is actually to do with the cash proceeds that were going to be received by Christian Juren, what your plans were, but 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, and decision will be made once we receive the proceeds. And the decision which will be made will, of course, be dependent upon the outcome of the tender offer.
Okay. Many thanks. But 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 Istag from Barclays. Sorry. Sir, please go ahead.
Yes, thank you. Good afternoon, everyone. Just you said that you would not squeeze the deal if you didn't get 400% of the tender offer through. I just wondered why not. So isn't that in your best interest to have full control over Christian Dior or the family to have full control over Christian Dior shares?
Well, let's be very precise. What the Arlo Family Group did say is that it did not intend to launch to implement a squeeze out in the period following the close of the transactions, I. E, we are talking about the 3 month period following the transaction. Now as far as the intent of the Arnaud family growth beyond this 3 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
Just precision basically, I do you have the right at your level to only have LVMH shares because I would have thought that you were forced to have at least 2 assets there. So 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.
Well, it seems to me that at the beginning when this the whole structure was made, you needed to have more than one asset in Christian Dior, but maybe amongst. So I just wanted to
The logic is to have more than one and but the there is no particular rule that obliges the company to diversify from its main asset. And in any way, the shareholder if you look Dior right now, I mean, the shortening in RBMH is obviously much more valuable than the holding in your Couture. And by the way, after the transaction, as Florent told you, I mean, there will be 2 assets. 1 will be the 41% holding in RVMH and the other one will be €6,500,000,000 in cash or a credit note on RVMH as long as it isn't paid.
All right. Thanks.
Thanks, Luca.
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.
Bye bye now. Thank you.
Ladies and gentlemen, this concludes the conference call. Thank you all for your participation. You may now disconnect.