French billionaire Bernard Arnault will combine the Christian Dior fashion brand with his LVMH luxury goods group as part of a €12 billion move to simplify his business interests.
The restructuring move has long been demanded by other investors.
Under a series of complex transactions, LVMH will buy the Christian Dior Couture brand from the Christian Dior holding company for €6.5 billion, including debt.
That will unite the 70 year old fashion label worn by film stars from Grace Kelly and Elizabeth Taylor to Jennifer Lawrence and Natalie Portman with the Christian Dior perfume and beauty business already owned by LVMH.
The Arnault family, which holds a 47% stake in LVMH, will also offer to buy the 25.9% of the Christian Dior holding company it does not already own for about €260 a share.
This represents a premium of 15% over Monday's closing price.
Arnault said the deal would boost earnings at its fashion and leather goods division.
The Dior holding company owns 41% of the LVMH group and 100% of Christian Dior Couture, the home of the Lady Dior handbag.
Arnault's family company will offer €172 per share and 0.192 Hermes shares for each Dior holding company share. It will also offer all-cash and all-share alternatives.
Arnault has a stake of about 8% in luxury group Hermes, and its shares fell about 5% on the prospect of more of the stock coming to the market.
The transactions "will allow the simplification of the structures, long requested by the market, and the strengthening of LVMH's Fashion and Leather Goods division," Arnault said in a statement.
LVMH said the overall deal would boost earnings per share within the first year of its completion, with the transactions expected to close during the second half of 2017.
