How one franc turned LVMH into a luxury superpower


A symbolic franc. That's all that Bernard Arnault paid for Boussac, a textile firm near chapter, in 1984.

From this tiny acquisition, Mr. Arnault constructed LVMH during the last forty years is grew to become the richest man in Europe within the course of. LVMH's gross sales for the previous 12 months reached 46.eight billion euros, greater than thrice the dimensions of its closest rival, Kering.

This progress was propelled by Mr. Arnault's voracious urge for food for negotiations. Initially, he was attracted by the troubled textile firm Boussac as a result of she had a jewel on which he needed to purchase: the luxury model Christian Dior. From there, Mr. Arnault used Christian Dior as a cornerstone on which he continued with forty extra acquisitions.

After taking up Boussac, Mr. Arnault's profession was confirmed in 1989 when he acquired a majority stake in LVMH, which was the results of a merger between the Louis Vuitton style home and the champagne and cognac producer Moët Hennessy.

He then ousted Louis Vuitton's president, Henry Racamier, from his household enterprise. Mr. Arnault then used the identical tactic of chasing the founders, splitting households or creating a hole between buying and selling companions, with the aim of creating different acquisitions equivalent to Givenchy, Château d'Yquem and Duty Free Shoppers.

Mr. Arnault used transactions as a means to develop past the roots of LVMH and to enter new ones sectors.

For instance, in 2006, he purchased the luxury lodge group Cheval Blanc Hotels. Last December, LVMH prolonged its attain to luxury experiences with the acquisition of $ three.2 billion from the Belmond journey and hospitality group, proprietor of the Cipriani lodge in Venice and the Orient Express.

It is barely not often within the lengthy historical past of Mr. Arnault's negotiations that he missed a in style goal.

His largest defeat occurred 20 years in the past, when French industrialist François Pinault got here out victorious from him in a fierce and lengthy battle for management of the Italian luxury model Gucci. Mr. Pinault served Gucci to create his personal luxury empire: Kering.

And Mr. Arnault had one other exceptional girl: Hermès, the French model recognized for its Birkin purses and silk scarves.

About a decade in the past, LVMH began secretly elevating shares in Hermes, utilizing spinoff contracts with completely different banks to remain under disclosure threshold.

 Stacked bar graph showing that LVMH's earnings have increased 11-fold since 1995

The Dumas household, proprietor of Hermès, didn’t notice what was taking place till that day. that it seems in 2010 that LVMH held 17%. l & # 39; firm.

Mr. Arnault all the time asserted that he had solely "good intentions" vis-à-vis Hermes and that he had no plan for it. take management. But the Dumas household thought in any other case, believing that it was a collective assault.

They efficiently sued to forestall LVMH and the Arnault household from taking management of their enterprise, though Mr. Arnault nonetheless received a victory as he was creating wealth promoting Hermes.

Earlier This week, LVMH has confirmed that it’s pursuing one other high-end model, the American jeweler Tiffany & Co.

If profitable, the settlement of $ 14.5 billion would mark the most important acquisition Mr. Arnault and would push LVMH into luxury it’s a portfolio of jewelery belongings that rivals that of Richemont.

The age doesn’t appear to have lessened the market thirst of Mr. Arnault, 70 years previous. He informed the Financial Times this 12 months: "We are still small. We have just started. . . We are number one, but we can go further. "



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