H&M may be taken off the stock market

The H&M Group, the colloquial name for Hennes & Mauritz AB — the Swedish giant behind H&M and COS, among others — has become the focus of speculation suggesting it may soon be withdrawn from the stock market, marking a potential return to private ownership. Such a shift would be monumental for a company that has been publicly listed on the Swedish stock exchange since 1974. Leading this transformation is the founding Persson family who, as reported by BoF, have been methodically increasing their stake in the company for years, fueling a wave of speculation, investor concern, and deeper analysis of H&M’s future. Since 2016, the Persson family has significantly increased its shareholding by investing through their private holding company, Ramsbury Invest. Over the past nine years, they have spent more than 63 billion Swedish kronor, equivalent to approximately 6.6 billion US dollars, to acquire additional company shares. This has raised the family's direct stake from 35.5% in 2016 to nearly 64.0% today, an increase of 28.5 percentage points. Including shares held by extended family members, the Perssons now control around 70.0% of the capital and approximately 85.0% of the voting rights, a supermajority that grants them virtually unlimited decision-making power. This "reabsorption" of family shares appears to stem from a desire to operate independently of external investors and to take the family’s business growth out of the public eye — but it’s not that simple.

Despite the increasing concentration of power, for over a year the Perssons have denied any intention of delisting H&M from the stock market, claiming that accumulating shares via their family holding company reflects their confidence in the company’s future. Nevertheless, the continued accumulation of shares without a clear strategic statement has raised concerns among investors and calls for greater transparency. If the purchases continue and the family acquires 90% of the company, the concentration of shares would allow them to request the company’s removal from the stock exchange. Currently, only 20.0% is needed to reach this threshold. However, according to analyst Niklas Ekman, cited by BoF, the motivation is likely not financial but emotional. The family already exercises near-total control over the group and has managed it for decades as a family business: Stefan Persson, the 77-year-old patriarch who served as CEO for 16 years and chairman for over two decades, was succeeded by his son Karl-Johan, now chairman of the board and former CEO until 2020. If the privatization were to proceed, it would be very costly. Analysts estimate that, at the current share price, at least 70 billion Swedish kronor, or about 7.3 billion US dollars, would be needed to acquire all remaining shares.

Such an operation would likely require significant debt, potentially impacting the company’s ability to invest and innovate, as well as affecting cash flow and the overall financial health of the business — which might explain the gradual, long-term accumulation of shares that spreads the financial burden over time. The fewer shares available, the harder it becomes to convince the remaining shareholders to sell, especially since they might demand a higher price. Overall, as interviews with various Swedish stock market experts indicate, the Persson family’s moves appear quite unclear, especially considering the many challenges H&M is facing. The group’s shares, which reached their peak around ten years ago, have lost nearly 60.0% of their value since then, leaving H&M with a market capitalization of approximately 220 billion Swedish kronor. These are large numbers, but they pale in comparison to archrival Inditex, the parent company of Zara, whose stock has increased by about 60.0% over the same period. The performance of the two groups is diametrically opposed in many respects. And given that H&M is the only company in Stockholm’s main index that does not disclose executive shareholdings, and with Persson Jr. frequently criticizing the market’s short-term profit obsession, the air of mystery lingers. One question remains, however: is the Persson clan playing a dangerous game?