LVMH Takes $75 Million Stake in G-III Apparel

LVMH Moët Hennessy Louis Vuitton has reported a 5.4% passive stake in G-III Apparel, the same company it sold Donna Karan’s International to.

According to an article on The Fashion Law, LVMH Moët Hennessy Louis Vuitton has reported a 5.4% passive stake in G-III Apparel. A passive stake is a form of investing where the shareholder takes no part in running the company. The company does, however, have a shared voting power.

G-III Apparel, which owns licenses for Calvin Klein, Ivanka Trump, and more, sold $75 million in common stock to LVMH in connection with the DKNY deal.

In July, LVMH, parent company to Louis Vuitton, Chanel, and more, sold Donna Karan International to G-III Apparel. The luxury company sold the brand for $650 million. LVMH doesn’t ever sell brands, though. They’ve only ever sold Cristian Lacroix, Ebel watches, and a minority stake in Hermès.

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Donna Karan has, however, costed LVMH quite a bit of money. DKNY C and DKNY Jeans were discontinued in April after having costed the company about $200 million in revenue.

G-III Apparel funded the purchase price of $650 million for DKNY with cash, $75 million of shares in its common stock to LVMH, and a $125 million junior lien seller note. $75 million will be paid to LVMH on a deferred payment plan of 6 1/2 years. The remaining $50 million will be paid in 7 years.

Some of the cash was paid from the proceeds of a $350 million 6 year senior secured term loan. Another portion was paid with the balance from a $650 million 5 year senior secured asset revolving credit facility. The company also paid with cash it had when making the deal.

G-III Apparel had been reported to be selling $75 million in stocks to LVMH on a seller note in July. There just weren’t any specific details about the deals or any other ways G-III Apparel would financially compensate LVMH. It was said, however, that the company was financed by Barclays and JPMorgan Chase Bank.

Donna Karan cost LVMH a lot of money but G-III Apparel expects the brand to make them more valuable in a couple of years. The company expects to increase revenue to $5 billion with Calvin Klein at $1 billion in fiscal 2017. Sales at Donna Karan, however, are expected to be only $300 million.

So, what do you think? Will Donna Karan make G-III Apparel Group more valuable? Let me know in the comments below. Also, don’t forget to subscribe to get new posts sent directly to your inbox and follow me on Facebook, Instagram, and Snapchat.


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