The high fashion group Hermes SA, which sells scarves, ties and the $8000 Kelly handbag (named after the late Grace Kelly) will buy a 30% stake in Leica Camera. The reason, admits Leica's spokesperson, is that Hermes is much better at marketing luxury goods... Read newsreport below.

******* Hermes Offers to Buy 30% of Leica Camera for EU17 Mln (Update1) 11/20/0 4:55 (New York)

Solms, Germany, Nov. 20 (Bloomberg) -- Hermes International SCA, France's third-biggest luxury goods maker, offered to buy 30 percent of Leica Camera AG, a German maker of luxury cameras, for about 17 million euros ($14 million). Hermes offered Leica shareholders 12.50 euros per share, 27 percent more than Friday's close. Holders can take up the offer between Nov. 22 and Dec. 20, Leica spokesman Gero Furchheim said in a telephone interview.. Unlike rivals Cie. Financiere Richemont AG and LVMH Moet Hennessy Louis Vuitton SA, Hermes hasn't acquired luxury watchmakers or clothing makers to boost sales. ``For us, it's important to find a partner who has a first- class knowledge of distributing luxury products,'' Furchheim said. He said it's too early to say what the partnership will look like. Shares in Paris-based Hermes rose as much as 1.5 euros, or 0.86 percent, to 175 euros. Leica's shares are suspended for the day. They rose 3.1 percent, to 9.85 euros Friday. Leica's management board sees the price as ``fair'' and recommends stockholders take up the offer, the German company said in a statement on the Frankfurt stock exchange news wire. More than 80 percent of Leica's shares are publicly traded. Lancet NV Holding owns 13.6 percent and Deutsche Steinzeug AG has a 5.3 percent stake in Leica. Leica said its first-half loss widened to 6.7 million deutsche marks in the six months ended Sept. 30 from 4.6 million marks a year earlier, in part because of the euro's weakness. The company said it expects to post a profit for the full year as sales pick up in the second half. Sales rose 16 percent to 141 million marks in the first six months of fiscal 2001.

-- Mani Sitaraman (bindumani@pacific.net.sg), November 20, 2000

Answers

OK:

You have been ignoring this post for a while. Consider:

Hermes International SCA, France's third-biggest luxury goods maker, offered to buy 30 percent of Leica Camera AG, a German maker of luxury cameras,

What the hell is a luxury camera?

Art

-- Art (Art Karr90975@aol.com), November 22, 2000.

It the Hermes deal goes thru, it will be a good thing for Leica, which needs new financial backing by some one with deep pocket. It is hard to compete alone in today's very competitive camera market. Nikon has ghe backing of giant Mitsubishi, Rollei has the backing of Samsung of Korea .. Hermes has world wide distribution network around the globe, which will help to boost sales of Leica cameras. As for "fashion accesory" that may not fit Leica; just as Mont Blanc pens, Rolex watches are not just accesories. I can foresee that the price of Leica camera will increase quite rapidly down the road.

-- martin tai (martin.tai@capcanada.com), November 23, 2000.

A financial injection can be a good thing, or it can be stifling. If Leica Camera can remain somewhat autonomous, doing what they do best, without having to justify every move, it would be good. If the shift goes from the "bread and butter" real world cameras and lenses for real world USERS to "limited edition" this or "commemorative model" that... for COLLECTORS... then we, as users, should start hording now.

I don't need pretty, fancy or 1 of 2000. I just want conservative metal and glass that works. If it breaks, I want to be able to go buy another... longevity of the line up.

Let's hope the reason for the merger is because Hermes is owned by Leica photographers that have an interest in the Line from a historical perspective, and will let it thrive with the influx of cash. But a hyphenated "Leica-Hermes" red dot on my new camera would make me go back and review that "what tape should I use...?" thread.

-- Al Smith (smith58@msn.com), November 23, 2000.

I worry a little about this too in that Hermes know nothing about optics or cameras, but they do know about selling and marketing luxury goods, and Leica sorely needs some good marketing. If they can increase their sales to the "Rolex wearing class" then this seems a good fit. The worry has to be that the Leica is special and cannot be mucked about with that much or it will die swiftly. So I think a cautious voter in its favor, although I am sure many of us will hate the resulting advertisements and tie-ins.

-- Robin Smith (rsmith@springer-ny.com), November 26, 2000.