Shares for LVMH (EPA: MC), the French luxury group and owner of the Luis Vuitton brand, are up 2.89% today on news that the company is purchasing an 80% stake in luggage maker Rimowa. The acquisition, worth 640 million euros, is the company’s first in Germany.
Rimowa’s luggage, which is lightweight and easy to use, is popular with Chinese tourists, who use them to transport luxury items they buy overseas.
LVMH will purchase the stake from Dieter Morszeck, who is the grandson of Rimowa’s founder. Morszeck will still hold a stake in the company and will remain in his leadership role. Alexandre Arnault, son of LVMH head Bernard Arnault, will serve as co-chief executive.
Rimowa, founded in 1898 in Cologne, Germany, projects revenue of over 400 million euros in 2016. The company’s aluminum suitcases retail for between 300 and 600 euros.
The luggage maker was the first to introduce aluminum flight cases in 1937, and they were the first to introduce polycarbonate suitcases in 2000. Recently, the company announced a partnership with Lufthansa to launch an electronic tag. The tag would streamline the check-in process by using a smartphone to match the boarding card with a Bluetooth electronic tag inside of the suitcase.
“Rimowa is a brand with a unique heritage,” Bernard Arnault said in a company statement.
News of the deal comes after Samsonite agreed to purchase luxury luggage maker Tumi earlier in the year as part of a $1.8 billion deal.
The acquisition may prove to be beneficial for LVMH in the long-term. Analysts project that high-end travel will continue to see strong growth, but growth in the luxury goods industry will be subdued in the medium-term.
LVMH’s acquisition must be approved by anti-trust regulators before going through. The deal is expected to be completed by January 2017, according to a statement from the company.
