Critics find a whiff of scandal in YSL takeover

WHEN a state-owned giant takes over a world- famous haute couture house run by a close friend of the Socialist president just before an election that is expected to tip the left from power, tongues tend to wag.

The purchase of Yves Saint Laurent by Elf-Sanofi, a subsidiary of the Elf petroleum company, announced on 19 January, has prompted talk of over-valuing and insider trading. The purchase, putting the value of YSL at Fr3.5bn (pounds 429m), assumed a share price of Fr850 compared with a Paris Bourse quotation the day before of Fr630.

'It was over-valued by 20 to 30 per cent,' said Bernard Barnier, a Bourse analyst. The 39 per cent of Elf-Sanofi shares quoted on the Bourse dropped by 10 per cent the day after the purchase. Elf-Sanofi, whose main business is pharmaceuticals, owns the cosmetics trademarks Roger et Gallet, Stendhal, Van Cleef et Arpels, and Oscar de la Renta, and 50 per cent of Nina Ricci.

What adds spice to the story is that the main beneficiary, apart from the reclusive Mr Saint Laurent, is Pierre Berge, a close friend of President Francois Mitterrand. Mr Berge is also director of the Paris Opera, a position in which he fired Daniel Barenboim as chief conductor.

The conservative opposition is expected to win the National Assembly elections in March. After that, as is almost traditional, the top posts in nationalised French companies will be redistributed to friends of the new government.

The announcement that a buyer had been found for Yves Saint Laurent, with both the designer and Mr Berge, the company's chairman, remaining at the helm, came after four months in which the Bourse watchdog, the Commission des Operations de Bourse, had the YSL share under surveillance at the request of minority shareholders. On 17 September, 53,887 shares changed hands, followed by 25,808 the next day. Altogether, 2 per cent of YSL capital was traded in two days for a company whose daily share movements are usually measured only in the hundreds. After the New Year, the share rose by 20 per cent in an otherwise sluggish market until the Elf deal was made public.

With an unusually aggressive style, it has been the daily Le Monde that has raised questions about the affair. The newspaper quoted an unnamed financial analyst in a front-page article as saying: 'It's scandalous. The Saint Laurent dossier was put to all the luxury cosmetics groups for months. Nobody wanted it. And, for political reasons, eight weeks before the elections, it finds a buyer at a Bourse price which amounts, with all other things being equal, to the double of Dior.' Mr Berge told the conservative Le Figaro: 'For me, it was a very good deal.'

Le Monde said that Mr Berge and Mr Saint Laurent had contracted Fr800m francs of personal debt between them in 1991 to buy back YSL shares. The sale of the company wiped out this debt and would bring each man a profit of Fr400m after taxes, it said. In addition, Mr Saint Laurent will earn Fr10m annually as consultant for the perfumes that bear his name while he keeps control of the fashion house.

(Photograph omitted)