Activist Investor Takes Stake In Cartier’s Parent Company
Activist hedge fund Third Point has taken a 1.2 percent stake in Cartier’s parent company, Richemont — a move that is likely to put the focus on the company’s struggling online business and capital structure.
The hedge fund, which is managed by billionaire investor Daniel Loeb as well as U.S.-based fund Artisan Partners, is already pressing Richemont to improve its business performance.
Richemont, which also owns brands such as Chloe, Dunhill and Montblanc, has seen its stock underperform, while LVMH’s stock has increased by more than 50 percent.
“This is a very interesting, not to say promising, development. Some external pressure is always healthy,” Vontobel analyst Jean-Philippe Bertschy told Reuters.
Third Point’s move to invest in Richemont is likely to influence the corporate governance of the luxury group. The company’s Class A shares are traded on the SIX Swiss Exchange, while its unlisted Class B shares are helped by South African billionaire Johann Rupert’s Compagnie Financiere Ruper. Although the unlisted shares represent only 9.1 percent of the equity, they reportedly account for 50 percent of the votes in the company.
According to Bertschy, this type of structure is no longer viable in today’s day and age.
“In my opinion, Third Point and Artisan Partners are not the only ones to exert pressure in that sense; it’s just the tip of the iceberg,” he said.
The hedge fund also recently took a large stake in Royal Dutch Shell and it has asked the oil giant to split its business into multiple companies.
The company’s interest in Richemont will likely accelerate Richemont’s effort to divest its loss-making Yoox-Net-a-Porter (YNAP). That is something Kepler Cheuvreux analyst Jon Cox thinks was going to happen anyway.
“I suspect that the company was going to do this anyway and wants it to be profitable before it happens to realize greater value. I am not sure if Third Point is going to be able to accelerate that process,” Cox said.
Originally published at https://retailbum.com on November 9, 2021.
