French luxury groups LVMH and Hermes said they have struck a deal that brings to an end their dispute over LVMH's 23.2 per cent stake in the maker of Birkin handbags.

Hermes has objected to the holding ever since it learned of it in 2010, and LVMH was sanctioned by the market regulator for failing to properly disclose the stakebuilding.

Under the deal announced by both companies, LVMH will distribute all its shares in 177-year-old family-controlled Hermes to its shareholders, and LVMH's largest shareholder, Christian Dior, will in turn distribute the Hermes shares it gets to its own shareholders.

LVMH, Dior and Groupe Arnault - the family holding of LVMH which will have 8.5 per cent of Hermes after the distribution - have also undertaken not to acquire any shares in Hermes for the next five years.

Reuters