PARIS (Reuters) - Trading in the shares of Hermes (HRMS.PA) will be suspended at the French luxury group's request on Thursday, the day it finds out if plans to create a family holding designed to ward off arch-rival LVMH (LVMH.PA) are approved by a Paris court.
LVMH, the maker of Louis Vuitton handbags and Celine dresses, officially claims it does not wish to take control of Hermes but the group has been steadily increasing its stake in Hermes from 17 percent in October last year to nearly 22 percent.
Hermes, known for its silk scarves and 7,000 euro Birkin and Kelly handbags, sees Arnault's arrival in its shareholder capital as hostile and rejects proposals of cooperation from the world's biggest luxury group.
In January, Hermes obtained an exemption from the French stock market watchdog AMF from having to buy out other shareholders if it wanted to create its family holding.
The entity would own more than 50 percent of share capital and make it harder for family shareholders to sell shares to LVMH by locking them in for decades.
But French minority shareholders' association Adam attacked the AMF's exemption and lodged a complaint with the court of appeal in Paris which is expected to hand in its verdict on Thursday morning.
If the court of appeal upholds the AMF's exemption, Hermes plans to create its family holding by the end of the year, the company's lawyer said.
If the court challenges the AMF's decision, temptation within family shareholders -- who together own 73 percent of capital -- to sell shares to LVMH will be greater and the stock price could soar further on speculation LVMH will make a bid.
Hermes shares are to resume trading on September 16.
LVMH said it planned to continue buying shares, helping sustain Hermes's stock price which has gained more than 67 percent since Jan 1, in spite of downward market trends.
Bernard Arnault, France's richest man who heads and controls LVMH, built the group on acquisitions and made no secret he admired Hermes and wished to develop closer ties with the 174-year-old French brand.
Arnault's track record shows he used stealth and ruthless tactics to fulfill his ambitions.
Reporting By Dominique Vidalon and Astrid Wendlandt; Editing by Elaine Hardcastle