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Fashion Law reports that a growing number of M&A deals
and investment rounds are bringing together some of the biggest
names in the fashion and luxury space. In November 2021, $1.15
billion brought Cartier’s parent company Richemont, Chinese
e-commerce titan Alibaba, and fashion retail platform Farfetch
together. Meanwhile, LVMH Moët Hennessy Louis Vuitton decided
to acquire Tiffany & Co. around the same time.
While many brands have decided to merge, either because of the
effects of the COVID-19 pandemic or capital restrictions, they
should ensure that risks are managed. Mergers and acquisitions are
presented as great options, but companies must undertake thorough
due diligence to assess the legal, reputational, and financial
Consumer perception and acceptance of mergers of luxury brands
may be the biggest risk posed. A loyal consumer may be upset due to
a merger with their chosen brand, especially if the two merging
entities were once competitors. Local brands considering mergers
will need to ensure compliance with regulatory bodies like the
Competition Commission and the takeover regulation panel before
entering into mergers or acquisitions, as non-compliance penalties
could potentially sink a deal.
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