Bernard Arnault, CEO of LVMH Group Acquires Minor Stake In Rival Richemont Group

The realm of luxury was in for a shock as Bernard Arnault, CEO and Chairman, LVMH Group built a minor stake in Swiss luxury holding group Richemont in a stunning power move. Pitched as rivals, both the Swiss groups have been at loggerheads vying for some of the most sought after brands in the realm of luxury fashion, high jewellery and watchmaking. The move comes just a few months after Arnault was reported commenting on Richemont Chairman, Johann Rupert as an “Outstanding Leader” whose strategy he wouldn’t want to upset. “I understand he wants to remain independent. I find that very good. If he wants support to maintain his independence, I’ll be here,” he said. (Source: Bloomberg)

With Cartier as its crowning jewel, the Richemont Group has long since been an attractive proposition for the LVMH Group however, the acquisition is not deemed to create immediate synergies as the investment comes from Arnault’s personal wealth. This move is not likely to raise any antitrust concerns, however the news did drive Richemont shares by almost 4%. Just last week, LVMH announced that it had acquired Swiza, the owner of ornate desk clock maker L’Epée 1839, for an undisclosed sum. 

A possible LVMH-Richemont merger could redefine luxury industry dynamics, uniting iconic jewellery brands like Cartier, Van Cleef & Arpels, Tiffany and Bulgari. With a speculated valuation of 111-130 billion Swiss Francs, financing through a mix of cash and shares is considere, given LVMH’s $400 billion market value. Despite potential competition concerns, Rupert’s 10% equity and 51% voting rights in Richemont present a formidable barrier to any acquisition attempts by Arnault.