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Thursday, April 8, 1999 Published at 14:17 GMT 15:17 UK

Business: The Company File

Gucci rejects takeover bid

Gucci says its is still prepared to hold talks with LVMH

Italian fashion house Gucci has rejected a takeover offer by French luxury goods company LVMH.

Gucci said LVMH had offered 85 US dollars (£53.13) a share - four US dollars more than originally indicated - but that it objected to a new condition attached to the offer.

However, the Italian company said it was willing to continue talks with the owner of Louis Vuitton luggage and Moet & Chandon champagne for possible future offers.

[ image: Gucci is reluctant to release more shares to LVMH]
Gucci is reluctant to release more shares to LVMH
Gucci said the offer had been conditional on releasing new shares in the company in order to give LVMH a controlling interest.

Such a request had been expected from LVMH in order to counterbalance the huge 42% shareholding owned by French retail group Pinault-Printemps-Redoute.

Gucci said issuing new shares for LVMH would undermine the power held by its smaller shareholders who may not want to accept the offer.

Despite the refusal, LVMH can still go directly to investors in an attempt to persuade them to accept the deal.

'No chance of success''

LVMH later said: "No further discussion between the parties are currently contemplated."

As an alternative to the raised $85 a share bid, LVMH had offered an even higher offer - of 91 US dollars a share - if the PPR share purchase deal was cancelled.

[ image: LVMH can still put their bid directly to shareholders]
LVMH can still put their bid directly to shareholders
Gucci issued new shares last month to give PPR a 42% stake in an operation that diluted LVMH's then 34% holding to 20%.

PPR's new 42% shareholding meant a public takeover offer for Gucci "could have no fair chance of success", LVMH said.

LVMH had proposed that Gucci accept a scenario where PPR's blocking vote would be disregarded and that only a majority of the remaining shareholders' votes would be needed for a takeover to go ahead, but Gucci had rejected the proposal.

The bidder said it would now await the outcome of a court hearing later in the month which will consider the legality of the issue of shares to PPR.

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