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LVMH to Buy Majority Stake in Luggage Maker Rimowa

lvmh LVMH Moet Hennessy Louis Vuitton SE has reached a €640 million deal with Rimowa that will see it take over the controlling stake in the German suitcase maker.

The deal was announced by LVMH on Tuesday. It gives the world’s largest luxury good conglomerate 80 percent stake in Rimowa and expands the number of brands now under the control of the renowned French company.

Louis Vuitton, Christian Dior, Loro Paina, Marc Jacobs, and TAG Heuer are some of the brands that were already part of the LVMH group before its latest acquisition of the German luggage brand.

The controlling stake was bought from Dieter Morszeck, grandson of the founder of the Cologne-based luggage company. LVMH disclosed that Morszeck, who is Romiwa’s chief executive, would continue to maintain an equity stake in the company while also retaining his leadership functions.

Rimowa is unlike an average LVMH brand, such as Louis Vuitton, given it deals in utilitarian suitcases which are common sight at most airports. These sell for as low as $400. Founded in 1898, the company is credited as the maker of the world’s first aluminum suitcase, which it produced in 1937. It makes luggage and leather accessories for both men and women, but it is best known for its grooved aluminum suitcases. Popular figures that been seen with these include Will.i.am, Kanye West, and Kim Kardashian.

A spokesman for LVMH disclosed that Rimowa has surpassed the average performance in its market in the last few years. Its expansion over the past five years has exceeded the wider luggage market’s 5 percent growth. Analysts at RBC Europe estimate its sales growth at 20 percent a year for the last two years. The suitcase maker is expected to post more than €400 million in revenue this year.

The acquisition will enable Rimowa gain access to a number of top locations where LVMH maintains presence. It will also give it access to cheaper advertising.

Morszeck will be joined by Bernard Arnault’s son Alexandre in the running of the luggage brand. The 24-year-old will become the third child of the LVMH chairman’s five children to be offered a leading role in one of the conglomerate’s brands. He is the eldest of Bernard Arnault’s three sons with second wife Helene Mercier.

Arnault’s 41-year-old daughter Delphine heads the Louis Vuitton brand, with her brother Antoine leading the Berluti and Loro Paina brands.

One of the latest products from Rimowa features an electronic tag in it to enable communication with the owner’s smartphone via Bluetooth. Products of this kind, which are referred to as “smart luggage,” are generating increasing demand on the market, boosting the company’s potential profitability.

Approval still needs to be obtained from regulators before the deal can be finalized. The transaction is expected to be concluded by January.

Rimowa will become the first asset to be acquired in Germany by LVMH, if the deal is approved. It will also be the world’s leading luxury good conglomerate’s largest acquisition since that of cashmere maker Loro Paina in 2013.

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