PARIS, France — LVMH agreed to take over suitcase maker Rimowa for €640 million ($716 million) and will put Alexandre Arnault in charge of the group's first German asset, a sign that Bernard Arnault is expanding his offspring's role in the luxury empire.

The world’s largest luxury-goods maker is buying an 80 percent stake from Dieter Morszeck, grandson of Rimowa’s founder, LVMH said Tuesday. Morszeck will run the Cologne-based business alongside 24-year-old Alexandre Arnault, who gets his first big job at his father’s group. The acquisition is LVMH’s biggest since the 2013 purchase of cashmere maker Loro Piana.

Rimowa’s ribbed aluminium suitcases, a common sight in airport security lines, are owned by celebrities including Will.i.am and Gwyneth Paltrow. Selling for as little as $400, the cases are less of a luxury than LVMH’s Louis Vuitton, whose trunks typically cost thousands of dollars. Founded in 1898, Rimowa’s growth has outpaced the broader luggage market’s 5 percent expansion over the past five years, an LVMH spokesman said.

“LVMH is looking for brands that have heritage and a unique position,” said Mario Ortelli, a senior analyst at Sanford C. Bernstein. “They know that when they acquire these brands they can accelerate their development.”

As part of LVMH, Rimowa will find it easier to get top locations in shopping malls and benefit from discounted advertising, Ortelli said. For LVMH, the acquisition will add annual revenue of about €400 million and follows its disposal of Donna Karan International in July.

Rimowa — whose designs are based on the fuselage of the first metallic aircraft — has grown sales at a pace of 20 percent per annum over the past two years, RBC Europe analysts estimate.

LVMH shares rose 2.7 percent to €156.15 at 1:17 pm in Paris.

'Training Ground'

Alexandre Arnault becomes the third of Bernard Arnault's five children to take a leading role at the maker of TAG Heuer watches and Marc Jacobs fashions. Delphine Arnault, 41, heads the flagship Louis Vuitton brand, while her 39-year-old brother Antoine is CEO of shoemaker Berluti and chairman of Loro Piana. Alexandre is the eldest of three sons Bernard Arnault has had with his second wife, Helene Mercier.

“Alexandre is bright, and it’s a good training ground and an important sign of recognition for him,” said Luca Solca, an analyst at Exane BNP Paribas.

Bernard Arnault, 67, has been broadening his children's responsibilities to test them as potential successors. He's not the only luxury mogul facing a succession quandary: Giorgio Armani and Chanel designer Karl Lagerfeld are in their 80s, while Roberto Cavalli is 75.

Rimowa, which made the world’s first aluminium suitcase in 1937, operates in the more utilitarian side of the $18.8 billion global luggage sector alongside market leader Samsonite International, France’s Delsey and Antler of the UK. Those with more to spend often choose among Paris-based Goyard, Italian brand Valextra, Britain’s Globetrotter or Louis Vuitton.

Rimowa's cases have a recognisable design of parallel grooves — as does its Cologne headquarters — and have become popular among celebrities including Kanye West and Kim Kardashian. Its more recent products include a suitcase with an electronic tag in it that can communicate to the owner's mobile phone via Bluetooth. So-called "smart luggage" products with features like Bluetooth or fingerprint locks are a fast-growing segment of the market, according to researcher Euromonitor.

Morszeck will keep a stake in the company and serve as co-CEO of Rimowa.

Bloomberg reporters: Corinne Gretler and Thomas Mulier; editors: Matthew Boyle and Phil Serafino.

Updated 9:00 am BST on 4 October, 2016 by BoF:

LVMH said the deal between the two companies is expected to be complete in January next year.

“Rimowa is a brand with a unique heritage. We share with Dieter Morszeck the same passion for innovation and a common desire to offer high quality products from a European tradition of craftsmanship,” said LVMH chairman Bernard Arnault in a statement.

The deal is an interesting addition to LVMH's portfolio, Mario Ortelli, senior research analyst for luxury goods at Sanford C. Bernstein told BoF, adding that the company could help expand the luggage maker’s retail footprint and advertising strategies, while Rimowa could share its integrated luggage technology and best practices with the group.

“LVMH seems like quite a good steward for this family business. Taking a majority stake and running it but not making an immediate cut for what is the culture or the tradition of the company,” he said. Interestingly, he added, LVMH's offer to Rimowa is similar to its deal with Loro Piana which means LVMH is experienced in managing different company structures.

“What is interesting is that Louis Vuitton recently launched a new trolley that is moving in the direction of more functional luggage, that tries to combine its exclusive characteristics with high functionality… Rimowa has got a unique positioning, lots of appeal to consumers in all the geographies. So it will be an interesting development for the group,” he continues.

Rimowa has got a unique positioning, lots of appeal to consumers in all the geographies. So it will be an interesting development for the group.

Luca Solca, head of luxury goods at Exane BNP Paribas, said the deal makes sense for the company. “While not a widely expected acquisition, it gives LVMH greater exposure to the continuing development of tourism and the travelling consumer. Rimowa is the only high-end brand remaining in the market, after the acquisition of Tumi by Samsonite. The multiple paid by LVMH makes sense, as it is in line with that paid by Samsonite for Tumi,” he told BoF.

Morszeck said in a statement that he had established close ties with the Arnault family and especially Alexandre, over the past two years. “Alexandre and I talked a lot about the attractive development prospects available to us and the common values that we share. I am very happy that he is joining Rimowa and I have every confidence in its ability to accelerate the current development with me."

The appointment of Alexandre is also interesting, said Ortelli, who noted that the younger Arnualt was previously involved in the digital strategy of the group. “This is an official document for an important acquisition and there is a statement of Alexandre, so it would be interesting see what will be the role of Alexandre now going forward in the group in time,” he said.

Additional reporting was contributed by Limei Hoang for The Business of Fashion.

Disclosure: LVMH is part of a consortium of investors which has a minority stake in The Business of Fashion. All investors have signed shareholder’s documentation guaranteeing BoF’s complete editorial independence.