CHRISTIAN DIOR / LVMH (CDI FP / MC FP)
TENDER OFFER : NEXT STEP & RELATIVE VALUE SPREAD
On 28 July, B.Arnault through SEMYRHAMIS has bought 348 348 CDI shares at €247.0034.
Clearly, Semyrhamis is kind to increase its holding in CDI: bear in mind that SEMYRHAMIS is barred from launching a squeeze out on minority shareholders for the next 12 months as per offer document and French rules (section 1.3.5 of the offer document) but is allowed to buy shares in the market.
· July 28th was the first day after LVMH quiet period ended to act on CDI shares and represents surely a sign toward a possible squeeze out / delisting of CDI one way or another (there is no need to maintain CDI listed as the vehicle is not tax optimum, listing costs are inefficient)
Quick reminder of the Offer:
1 CDI FP = 172€ + 0.192 RMS FP (Principal offer)
Or
1 CDI FP = 260€ (Cash Tender subject to proration)
Or
1 CDI FP = 0.566 RMS FP (Share Offer subject to proration)
· Results of the Offer: Semyrhamis has secured 94.22% of the capital and 96.52% of voting rights. On the 46.308.068 shares targeted,
· 9.878.173 were tendered in the principal offer
· 24.561.463 were tendered to the cash offer
· And 1.924.227 were tendered into the share offer.
· What could happen next? Below we summarize French takeover rules and trading ideas either on a pure arbitrage view or relative / fundamental one.
Trading Recommendation: The €247 price paid gives a comfort zone (per French rules this would be the minimum price that Semyrhamis would have to pay in case of any delisting), adding a special dividend to be paid in 2018 following the payment of the €6.5B for Christian Dior Couture (see p4) we would recommend investors to set up CDI/LVMH at 10.5% discount as there is still value in the spread.