LVMH splurges on Italian cashmere

French luxury goods giant LVMH has added Italian cashmere group Loro Piana (LP) to its large portfolio of brands, spending €2bn on an 80% stake. Described as "one of the most elitist brands in the world" by LVMH's communications director Christopher Hollis, LP is renowned for clothes made from vicua, rare wool harvested from a relative of a llama. Vicua items sell for tens of thousands of dollars. Sales at the family run firm led by sixth-generation descendants of the founder are expected to hit €700m this year.

What the commentators said

This deal provides a sobering insight into the state of Italy Inc, noted Rob Cox on Breakingviews. That "a jewel of Italian family capitalism like LP thinks its future nestled inside a French conglomerate is brighter than if it remained independent is a jarring signal". Family ownership militates against giving up control, and it is widespread in this sector. That explains why Italy's luxury firms never merged and pooled their resources, thus forming their own big national conglomerate, as Lex pointed out. "Italy's loss is definitely the French luxury conglomerates' gain."

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