Richemont reverses

8 Aug 2008 By Rachel Sanderson

The Swiss luxurytobacco conglomerate has revealed a complex plan to divide its businesses. It wants to stop the pricey trinkets from being stained by a tobacco discount. But the founding family will set up a new diversified fund. Its faith in luxury goods might be dwindling.

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Compagnie Financière Richemont said it would restructure its businesses to create a focused luxury goods business and a separatelylisted investment vehicle. The restructuring will result in the distribution of 90% of Richemont's interest in British American Tobacco to shareholders.

The separation will take place on 20 October 2008. CFR, the luxury goods business, will remain listed on the Swiss stock exchange. The new investment vehicle, Reinet Investments, will be listed in Luxembourg. Reinet Investments will focus on long term capital growth. It will not invest in luxury goods.

The share prices of the leading European listed luxury goods companies, excluding Hermes, have fallen by an average of 22% this year.

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