Luxury group LVMH and its billionaire CEO Bernard Arnault are set to take full control of Christian Dior.
The French billionaire proposed a €12 billion ($13 billion) deal on Tuesday that was cheered by the shareholders of both luxury titans.
Dior shares trading in Paris advanced as much as 13% to hit a record high, while LVMH shares jumped 4.5%.
The proposed deal is complicated — but the end goal of the transaction is simplicity.
The Arnault family already owns a controlling interest in both Christian Dior and LVMH. Arnault is chairman of both firms.
The family is offering to pay a 15% premium for the 26% of Dior they don’t already own. The deal would also bring Dior’s couture business under LVMH’s umbrella.
The “transactions will allow the simplification of the [business] structures,” Arnault said in a written statement.
LVMH owns a vast array of high-end brands operating in industries ranging from fashion to perfume and cosmetics. It manages brands including Louis Vuitton, TAG Heuer, Moët & Chandon and Benefit Cosmetics.
Luxury brands have come under pressure in recent years as sales in the West have slowed or declined.
Allyson Stewart-Allen, a director at International Marketing Partners, said the deal will also help LVMH diversify. Dior’s biggest regional market is Asia, accounting for over 30% of its sales.
“It’s a risk management strategy to diversify your portfolio … but it’s also about going for growth,” she said. “In the emerging markets, Dior is growing.”
The companies said they expect the deal to close in the next few months.