(Bloomberg) -- LVMH is investing in designer outerwear label Moncler SpA in a deal that will give the French luxury conglomerate a seat on the Italian company’s board.

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LVMH Mo?t Hennessy Louis Vuitton SE is buying a 10% stake in Double R, the investment vehicle controlled by Moncler Chairman and Chief Executive Officer Remo Ruffini, which itself owns a 15.8% stake in Moncler, the companies said in a statement late Thursday. Financial terms of the deal weren’t disclosed.

Shares of Moncler surged as much as 15% in Milan on Friday, increasing the company’s market value to about €16 billion ($17.8 billion). LVMH gained as much as 3.7% in Paris.

Moncler, which sells down jackets that can cost €5,500, has more than quadrupled its sales over the past decade, to almost €3 billion. Earlier this year, the label organized a glitzy fashion show in the Swiss mountain town of St. Moritz with celebrity attendees including Kate Moss and Anne Hathaway.

“Moncler has been one of the most significant entrepreneurial success stories in the industry over the past twenty years,” LVMH controlling shareholder and CEO Bernard Arnault said in the statement, adding that he will “support the independence of the Moncler Group.”

Under the terms of the agreement, LVMH will increase its stake in Double R to as much as 22%, which in turn will allow the investment vehicle to buy more shares in Moncler, up to a maximum of 18.5% over the next 18 months.

Ruffini Role

Ruffini took over Moncler in 2003 when the brand had faded into obscurity and has since transformed the company. As chairman and CEO, he will continue to drive development plans at Moncler, which also owns the Stone Island label, purchased about four years ago.

Moncler has in the past been seen as an acquisition target. LVMH said it intends to back Ruffini’s vision as a “stable long-term minority” shareholder of Double R.

Arnault’s group will also have two board seats at Double R, one of which will be filled by Antonio “Toni” Belloni, according to people familiar with the nomination.

LVMH declined to comment. A representative for Ruffini declined to comment.

Earlier this year Belloni stepped down as Arnault’s deputy but remains the head of Italy for the French luxury group.

The deal gives Ruffini the opportunity to increase control of the company and reinforce his position as its biggest shareholder, said Piral Dadhania at RBC Capital Markets. It’s an opportune deal for LVMH, too, allowing it to deploy excess cash in the absence of sufficiently large acquisition targets.