Baccarat: shareholders block stock-issue plan

Luxury crystal maker Baccarat is not about to be put up for sale, its controlling shareholder pledged on 9 January 2007. Barry Sternlicht, chairman and chief executive of Starwood Capital, the US prop…

Luxury crystal maker Baccarat is not about to be put up for sale, its controlling shareholder pledged on 9 January 2007. Barry Sternlicht, chairman and chief executive of Starwood Capital, the US property and hotel investment vehicle, said he aimed instead to emulate the success of much larger luxury product makers such as Hermes. However, the attempt by Starwood to give the Baccarat board the power to issue shares to new investors in order to fund expansion was defeated at a shareholder meeting in Paris on 9 January 2007. Starwood took control of Baccarat in 2005 when it bought the company that owns the Crillon hotel in Paris. Starwood sold Taittinger champagne, which came as part of the deal, but has decided to keep the crystal business, which dates back to the 18th century. Baccarat employs about 800 people. In 2005 it had sales of EUR 130 million, a 5% increase on 2004. However, its net profit fell 14% to EUR 3 million. Mr. Sternlicht said Baccarat“s economic performance had to improve. He told investors he wanted the company to expand in fast-growing luxury markets such as Russia and India, while further diversifying product lines. He hinted that a move into hotels was possible. However, a representative of the de Chambrun family foundation, which controls 33.5% of the stock, accused Starwood of not giving out enough information about its plans. The de Chambruns once controlled Baccarat. Opposition by the foundation was enough to block the plan to delegate stock-issuing powers to the board. However, Starwood succeeded in naming three new board members and evicting an ally of the de Chambrun family foundation because a smaller majority was required.