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R M Williams’ French connection

Iconic Australian boot maker R.M. Williams has announced that it has sold 49.9% of the company to an Asian private equity firm, L Capital Asia, backed by French luxury goods giant LVMH Moet Hennessy Louis Vuitton SA.

LVMH hold brands such as Louis Vuitton, Marc Jacobs, Givenchy, Moet & Chandon and Bvlgari. The addition of R.M. Williams to its stable could see R.M. Williams’ products sold alongside LVMH lines, and allow the brand to expand into new markets. Currently R.M. Williams has 63 stores across Australia, the US and the UK, with more than 1,100 stockists. The new deal will likely see more R.M. Williams products sold in Europe and the growth markets of Asia.

Current owner, Ken Cowley will retain the majority stake, in a clever move, allowing him to dictate the direction of the home-grown group, and retain a stake in its growth. Production will remain in Australia, as R.M. Williams strives to maintain the high quality of its products, some of which are still hand-made.

Mr Cowley took R.M. Williams private in 2003, after buying out the remaining shareholders, and valuing the company at $26 million. According to media reports, Mr Cowley was good friends with the late Reginald Murray Williams, founder of the company, and promised Mr Williams that he would take his legacy to the world.

One wonders if it’s only a matter of time before LVMH or one of its competitors, turns its eyes to another of Australia’s luxury goods makers, OrotonGroup Limited (ASX: ORL). Oroton is rapidly expanding into Asia, and looks to have a positive future, despite losing the Ralph Lauren licence last year.  That will see Oroton stop selling Ralph Lauren products from June this year, in return for around $30 million in cash.

After initially speculating that department store retailer David Jones Limited (ASX: DJS) or the owner of Dotti, Smiggle, Just Jeans and Jay Jays stores, Premier Investments (ASX: PMV) could be in the running for R.M. Williams, it’s clear that an investment by LVMH offers the boot maker much more opportunities to go global.

Foolish takeaway

In what looks like a very smart move, Mr Cowley appears to have set R.M. Williams on the path he promised to founder Reginald Murray Williams, while retaining the important manufacturing of the products within Australia. Looks like a win-win for R.M. Williams and Australia.

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The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.  This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool writer/analyst Mike King owns shares in Oroton and David Jones.

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