LVMH Reaches Deal to Acquire Donna Karan

LVMH Moet Hennessey Louis Vuitton (LVMHY Quote) said Monday it had agreed to acquire fashion design house Donna Karan (DK Quote) for about $243 million in cash.

The purchase price, $10.75 per share, represents a premium of 26% over LVMH's original proposal of $8.50 a share and 120% over Donna Karan's $4.87 closing price on Dec. 15, the day before LVMH submitted its original merger proposal, LVMH said.

When the deal closes, Donna Karan will be combined with LVMH unit Gabrielle Studio, the licensor of Donna Karan's trademark. Donna Karan, for whom the company was named, will continue to act as chief designer in the new company. She and her husband, Stephen Weiss, have agreed to exchange much of their Donna Karan shares for shares in the new venture. The Parisian LVMH intends to operate the New York-based Donna Karan as an autonomous company in the LVMH Fashion Group.

The merger should close in the third quarter of 2001.

Shares of Dana Karan gained $1.42, or 15.8%, to $10.40 in recent New York Stock Exchange trading. Earlier on Monday, the company hit its 52-week high of $10.44. On the Nasdaq, LVMH fell 12 cents, or 1.2%, to $9.87.