Tuesday 11 December 2018

H&M owners may be tightening grip

H&M’s ceo Karl-Johan Persson (R) and Nils Vinge, head of investor relations, in the company’s Stocklholm HQ
H&M’s ceo Karl-Johan Persson (R) and Nils Vinge, head of investor relations, in the company’s Stocklholm HQ

Erich Zann

Hennes & Mauritz AB Chairman Stefan Persson and his family may be about to consolidate their control of the struggling Swedish fashion giant through an offer that lets investors convert dividends into new shares.

H&M last week proposed an unchanged dividend for 2017 of 9.75 kronor per share.

The company also said the board will "investigate the possibility" of letting all its owners reinvest that dividend into new stock. Doing so would help H&M handle "continued high investments in areas such as digitalization", it said.

Mr Persson, who has a net worth of $17.7bn (€14.26bn) according to data compiled by Bloomberg, and his family have made clear they'll reinvest.

If other owners don't do the same, the family's stake will increase.

Mr Persson has already spent the past few years raising his position in H&M, leading to speculation that he may seek to take it private. (He's repeatedly said that's not his aim.)

If Persson and his family convert their dividend of 6.73 billion kronor (€904m) into new H&M shares at the January 31 closing price, they would get an extra 48.3 million shares. If all other shareholders opt for cash, the family's stake would rise to 43.4pc, from the 41.7pc held at the end of last year.

If his sister Lottie Tham and her relatives also reinvest, the families' combined stake would rise to 48.8pc.

While it's hard to know how H&M shareholders will respond to the offer, some analysts say smaller owners might be better off just taking the cash, given the challenges the company faces.

Claes Hemberg, a savings adviser at online broker bank Avanza AB, believes that H&M will lag behind the broader stock market. "It has such a long way to go" to address the issues it's struggling with, including challenges from "juggernauts like Amazon and Alibaba", he said. For the Persson family, that's not a problem because they have a very long investment horizon, but smaller investors should think twice before adding H&M shares, he said. (Bloomberg)

Irish Independent

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