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If you’ve learned anything about the $130+ billionaire Bernard Arnault
of LVHM, it’s the taxi ride story that prompted Arnault to buy Dior and the rest is history. THIS IS SUCH AN OBNOXIOUSLY SIMPLIFIED STORY and it hides the great story behind how Arnault got his start
...
of LVHM, it’s the taxi ride story that prompted Arnault to buy Dior and the rest is history. THIS IS SUCH AN OBNOXIOUSLY SIMPLIFIED STORY and it hides the great story behind how Arnault got his start...
I had to dig into articles from the 80’s to find more…
That encounter did happen in a NYC taxi in the 70s, but it only helped Arnault better instill his understanding of Dior’s strong brand. At the time, he was
That encounter did happen in a NYC taxi in the 70s, but it only helped Arnault
better instill his understanding of Dior’s strong brand. At the time, he was
working at his family business developing real estate on the East coast.
“Then, in 1984, he heard that the French Government was set to choose someone to take over the Boussac empire, a textile and retail conglomerate that owned the world-famous Dior fashion house.
“Then, in 1984, he heard that the French Government was set to choose someone to take over the Boussac empire, a textile and retail conglomerate that owned the world-famous Dior fashion house.
The Government had acquired control of Boussac after it collapsed in the largest bankruptcy in postwar French history. Arnault rushed back to his summer home in Saint-Tropez to chart a game plan with his advisers. He befriended Boussac's executives,
rushed back to his summer home in Saint-Tropez to chart a game plan with his advisers. He befriended Boussac's executives,
wooed some investors and lobbied key Socialist officials. And, to the amazement of France, the Government selected this young nobody to revive Boussac. Arnault leapfrogged from his family's $15 million-a-year business to a company 20 times as large. To buy control of Boussac,
leapfrogged from his family's $15 million-a-year business to a company 20 times as large. To buy control of Boussac,
Arnault put up $15 million and his partners $45 million.” -s1 “Mr. Arnault teamed with Antoine Bernheim
, a managing partner of the French bank Lazard Freres, to reach the final $80 million purse needed to buy Boussac.” -s2 “Within two years,
put up $15 million and his partners $45 million.” -s1 “Mr. Arnault teamed with Antoine Bernheim, a managing partner of the French bank Lazard Freres, to reach the final $80 million purse needed to buy Boussac.” -s2 “Within two years,
Arnault had pushed Boussac into the black. He laid off 9,000 workers and sold off Boussac's disposable-diaper division and most of its textile operations for $500 million.
had pushed Boussac into the black. He laid off 9,000 workers and sold off Boussac's disposable-diaper division and most of its textile operations for $500 million.
Although some Government officials say he promised to preserve jobs and assets, he insists the only pledge he made was to make the company profitable.” -s1
Meanwhile, at the same time,
Meanwhile, at the same time,
two separate business titans, Recamier
and Chevalier
, were fighting each other within the same company - LVMH.
Louis Vuitton merged with Moet-Hennessy in 1987 to form LVMH. Recamier ran Louis Vuitton, Veuve Clicquot Champagne and the Givenchy fashion operations.
and Chevalier, were fighting each other within the same company - LVMH.Louis Vuitton merged with Moet-Hennessy in 1987 to form LVMH. Recamier
ran Louis Vuitton, Veuve Clicquot Champagne and the Givenchy fashion operations.
Chevalier ran (the much larger) Moet-Hennessy. Chevalier originally pushed for the merger because his shares on the open market were mysteriously increasing - he only had 22% voting rights, so teamed with Recamier to assure he could stop a take-over bid.
ran (the much larger) Moet-Hennessy. Chevalier originally pushed for the merger because his shares on the open market were mysteriously increasing - he only had 22% voting rights, so teamed with Recamier to assure he could stop a take-over bid.
Within weeks of the new merger, decisions in strategy between Chevalier and Recamier could not be agreed. And to further Chevalier’s worries of a take-over, the stock price started to ascend again.
and Recamier could not be agreed. And to further Chevalier’s worries of a take-over, the stock price started to ascend again.
“Chevalier worried that a raider who made a generous offer could tempt some equity holding family members to stray from the fold. The chairman began looking for more protection.
worried that a raider who made a generous offer could tempt some equity holding family members to stray from the fold. The chairman began looking for more protection.
He suggested to Racamier that a 3.5% stake in LVMH be sold to Guinness, the British beer and spirits giant, and Racamier agreed.
that a 3.5% stake in LVMH be sold to Guinness, the British beer and spirits giant, and Racamier agreed.
But a 3.5% stake, Chevalier soon decided, wouldn't provide enough protection from raiders, so he proposed that Guinness be allowed to increase its LVMH holdings to 20%. As Racamier saw it, war had been declared.
soon decided, wouldn't provide enough protection from raiders, so he proposed that Guinness be allowed to increase its LVMH holdings to 20%. As Racamier saw it, war had been declared.
''This was a demonstration that wine and spirits wanted to take the leading role over baggage and accessories,'' he says.
He began his own quest for an ally. He concluded that Bernard Arnault, another luxury-goods owner-manager, was the man to help counterbalance Guinness.
says.He began his own quest for an ally. He concluded that Bernard Arnault
, another luxury-goods owner-manager, was the man to help counterbalance Guinness.
Racamier suggested that Arnault bid for 25% of LVMH's stock, which, with the Vuitton family holdings, would give the two groups majority control. Arnault jumped at the idea, but his investment banker,
suggested that Arnault bid for 25% of LVMH's stock, which, with the Vuitton family holdings, would give the two groups majority control. Arnault jumped at the idea, but his investment banker,
Antoine Bernheim of Lazard Freres, warned him not to declare war on the Chevalier/Guinness coalition because Guinness, with its huge financial resources, could easily stomp on Arnault in a battle for control of LVMH.
of Lazard Freres, warned him not to declare war on the Chevalier/Guinness coalition because Guinness, with its huge financial resources, could easily stomp on Arnault in a battle for control of LVMH.
What was more, if LVMH went into play, Bernheim cautioned, an outsider, perhaps Grand Metropolitan, the British conglomerate, could walk off with the prize.
Bernheim persuaded Arnault to ally himself with Chevalier and Guinness.
cautioned, an outsider, perhaps Grand Metropolitan, the British conglomerate, could walk off with the prize.Bernheim persuaded Arnault
to ally himself with Chevalier and Guinness.
In July 1988, Arnault joined with Guinness to form a holding company that bought 24% of LVMH's stock for $1.5 billion (over $3 billion today). Anthony Tennant, the Guinness chief,
joined with Guinness to form a holding company that bought 24% of LVMH's stock for $1.5 billion (over $3 billion today). Anthony Tennant, the Guinness chief,
said he approved the Arnault-led stockholding arrangement because he wanted to protect LVMH from a takeover by one of his competitors. While some observers suggested that Chevalier had invited a wolf to guard the chicken coop, he hailed Arnault's arrival on the scene.
-led stockholding arrangement because he wanted to protect LVMH from a takeover by one of his competitors. While some observers suggested that Chevalier had invited a wolf to guard the chicken coop, he hailed Arnault's arrival on the scene.
''We need a stable shareholder group because we are vulnerable to a takeover,'' he said. ''Today a shareholder is there, a Frenchman, one who is sympathetic.
Meanwhile, Racamier fumed.
Meanwhile, Racamier
fumed.
Soon the Paris Bourse exploded with rumors that the Vuitton clan was buying up LVMH stock to obtain a 33% ''blocking minority,'' which would enable Racamier to cripple LVMH's decision-making ability. In response,
to cripple LVMH's decision-making ability. In response,
Arnault launched his own share-buying assault, spending $600 million in three days [most likely with help from Bernheim] to push the Arnault-Guinness holdings to 37.5% of LVMH." Becoming the controlling shareholder in LVMH to this day.
launched his own share-buying assault, spending $600 million in three days [most likely with help from Bernheim] to push the Arnault-Guinness holdings to 37.5% of LVMH." Becoming the controlling shareholder in LVMH to this day.
Asked what lessons he has drawn from the LVMH battle, Arnault says ''In business, the secret is to seize opportunities.''
says ''In business, the secret is to seize opportunities.''
Follow me to learn more about buying [mainly software] businesses.Sources
s1 - https://www.nytimes.com/1989/12/17/magazine/a-luxury-fight-to-the-finish.html
s2 - https://www.forbes.com/sites/susanadams/2019/10/31/the-100-billion-man-how-bernard-arnault-stitched-together-the-worlds-third-biggest-fortune-with-louis-vuitton-dior-and-77-other-brandsand-why-hes-not-done-yet/?sh=45b1b5a84efb
