Newspaper article International New York Times

LVMH Private Equity Unit to Merge with Rival ; L Capital and Catterton Will Form One of Largest Consumer-Focused Firms

Newspaper article International New York Times

LVMH Private Equity Unit to Merge with Rival ; L Capital and Catterton Will Form One of Largest Consumer-Focused Firms

Article excerpt

The two sides said that the new company, to be named L Catterton, would be the largest consumer-focused investor firm in the world.

LVMH, the largest luxury conglomerate in the world, has been an investor in the funds of the American private equity firm Catterton for almost two decades.

And when LVMH's private equity arm, L Capital, with brands in Europe and Asia, considered expanding into the United States, its American counterpart was contemplating a move in the opposite direction.

Rather than compete, the two have now decided to combine in a deal rarely seen among private equity firms.

They say the new company, to be named L Catterton, will be the largest consumer-focused investment firm in the world, with some $12 billion in assets after several funds are expected to stop raising money this year, according to a statement issued Tuesday. The merger should be completed in several months, pending regulatory and investor approvals.

J. Michael Chu and Scott A. Dahnke, the managing partners at Catterton, will become the global co-chief executives at L Catterton, with headquarters in Greenwich, Conn., and London. L Catterton's partners will own 60 percent of the new firm, while LVMH and Groupe Arnault will jointly own the rest. The price and structure of the transaction were not disclosed.

"The globalization of media and technology, combined with increasingly permeable geographic borders, is driving rapid consumer growth on an unprecedented global scale," Mr. Dahnke said in the statement. "Together, Catterton and L Capital will create a global consumer investing franchise with unmatched access to resources in the industry."

Capturing each other's knowledge about their respective regions was the impetus behind the deal. In the luxury segment, especially, a physical presence is imperative. A study by Deloitte found that almost half of the consumers surveyed said that they had discovered new brands while shopping.

Both L Capital and Catterton wanted to capitalize on new markets to bolster growth in their portfolio of companies. …

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