LVMH Buys Donna Karan International

France’s LVMH Moet Hennessy Louis VuittonSA will buy famed U.S. fashion house Donna Karan International Inc. for $243 million, adding another household name to LVMH’s stable of luxury products. Donna Karan will remain artistic director and retain control over creative aspects of the firm, she said in an announcement Monday. She founded the firm in 1984, and it became one of the best known names in international fashion.

LVMH will pay $10.75 per share to acquire Donna Karan. The price is 26 percent higher than the $8.50 per share price initially proposed by LVMH in December. Ms. Karan and her husband, Stephen Weiss, had already agreed to sell Gabrielle Studios Inc., a private company that owns the Donna Karan brand names to LVMH for between $400 million and $450 million. On Monday, the price was set at $400 million to reflect the higher price being paid for Donna Karan.

Donna Karan designs and makes clothing under the Donna Karan New York and DKNY brands, and has 95 shops across the United States. Revenues last year were projected at $625 million.

LVMH’s portfolio of labels include Christian LaCroix, Emilio Pucci, Fendi, Givenchy and Marc Jacobs. Its other products include Dom Perignon champagne, Hennessy cognac, Christian Dior perfume and TAG Heuer watches.

“We look forward to closing the transaction and to moving forward with Ms. Karan and her team to help expand both the product line and geographic reach of this globally successful lifestyle brand,” said Yves Carcelle, president of LVMH’s fashion Group. LVMH’s purchase of Donna Karan is its largest investment in the U.S. fashion industry to date.

“I have always admired LVMH and the environment it has created for designers in supporting their creativity, emphasizing their individuality, respecting their brands and providing the resources to develop global luxury businesses,” Ms. Karan said.