June 8, 2023

By Published On: June 8, 2023Categories: Companies We LoveViews: 309

The unassuming French businessman Bernard Arnault is not a household name, but he should be. As the chairman and CEO of LVMH Moët Hennessy Louis Vuitton, the world’s largest luxury goods company, Arnault has quietly amassed a fortune that makes him the richest person in the world.

While tech titans like Jeff Bezos and Elon Musk dominate the headlines, Arnault has built an empire of champagne, couture, and crocodile handbags. Over the past three decades, he has turned LVMH into a powerhouse. Owning over 75 prestigious brands, it generates over US$85 billion in annual revenue.

Through a series of ambitious acquisitions, Arnault gained control of Christian Dior, Louis Vuitton and Fendi, cementing his status as the king of luxury. With a net worth of over $200 billion, the 74-year-old Arnault shows no signs of slowing down. His story is a testament to vision, determination, and the enduring allure of high fashion. Love them or hate them, LVMH’s brands have shaped the aspirational dreams of millions. And it’s all thanks to the quiet businessman from Roubaix – Bernard Arnault, the richest person in the world you’ve seldom heard of.

From Real Estate to Fashion Dominance: Bernard Arnault’s Journey to LVMH Leadership

In 1983, the political landscape in France shifted, prompting Bernard Arnault to return to his native country. At the time, Arnault was a young real estate developer, and he seized an opportunity in 1984 when he heard that the French government was seeking a successor for the Boussac Saint-Frères empire, which owned Christian Dior. With the assistance of Antoine Bernheim from Lazard Frères, Arnault acquired Financière Agache, a luxury goods company, and assumed the role of CEO. Eventually, he successfully outbid others to acquire Boussac Saint-Frères, investing $15 million of his own money and receiving support from Bernheim to secure the remaining funds.

Following the acquisition, Arnault sold off various assets of Boussac, generating a substantial profit of $400 million. He retained ownership of the Christian Dior brand and the department store Le Bon Marché. In 1985, Arnault took on the position of CEO at Dior, solidifying his presence in the luxury fashion industry.

In a significant move in July 1988, Arnault collaborated with Guinness to establish a holding company with a 24% stake in LVMH (Moët Hennessy Louis Vuitton). Subsequently, he further invested $600 million to acquire an additional 13.5% of LVMH, making him the largest shareholder of the conglomerate. These strategic investments demonstrated Arnault’s shrewd business acumen and set the stage for his ongoing success in regrouping and expanding LVMH.

Expanding the Luxury Empire: LVMH’s Strategic Acquisitions and Global Dominance

The expansion continued in subsequent years, with acquisitions such as Givenchy in 1988, Berluti and Kenzo in 1993, Guerlain in 1994, and Céline in 1996. LVMH further strengthened its portfolio with the addition of brands like Loewe, Sephora, and Marc Jacobs in 1996, and Tag Heuer and Fendi in 1999. The early 2000s saw LVMH acquiring several prominent names in the industry, including Emilio Pucci, La Samaritaine, Bulgari, and Nicholas Kirkwood.

In recent years, LVMH’s acquisitions have included brands like Rimowa, Jean Patou, Fenty, Stella McCartney, Off-White, and Officine Universelle Buly 1803, among others. Through these strategic acquisitions, LVMH has expanded its luxury empire. They diversify its product offerings and reinforce its position as a leader in the fashion and luxury market.

Masterful Business Acumen of the richest person in the world: Securing Better Deal for LVMH in Tiffany & Co. Acquisition

Bernard Arnault’s vision and business acumen have played a pivotal role in driving LVMH’s growth and success. Bernard Arnault’s shrewd negotiating skills were evident in the resolution of the dispute between LVMH and Tiffany & Co. Despite the challenges posed by the Covid-19 pandemic, Arnault managed to secure a better deal for LVMH. By effectively leveraging the circumstances, the new takeover price was set at $131.5 per share, slightly lower than the original price of $135. This adjustment resulted in a discount of $425 million for LVMH.

This successful outcome showcases Arnault’s astute business acumen and his commitment to maximizing value for LVMH. With his foresight and strategic mindset, Arnault continues to solidify LVMH’s position as a dominant force in the luxury sector, capitalizing on opportunities even in challenging times.

Trials and Setbacks: Bernard Arnault’s Defeats in the Acquisition Arena

In January 1999, LVMH sent shockwaves through the fashion industry. They discreetly acquired a 5 percent stake in Gucci. Bernard Arnault, the ambitious chairman, insisted it was a passive investment, vowing to preserve Gucci’s autonomy. But things quickly escalated. LVMH stealthily raised its stake to a commanding 34.4 percent within weeks. However, victory eluded them as Pinault-Printemps-Redoute (now Kering) swooped in. They offered LVMH a staggering $806 million for the majority stake in the Gucci Group. Arnault’s dreams of total triumph vanished as LVMH announced plans to sell their remaining Gucci shares to a financial institution. It was a bittersweet ending to their battle.

Fast forward to 2001, where LVMH set its sights on the coveted Hermès. With an initial 4.9 percent stake, LVMH seemed poised for success. Yet, their pursuit took a twist as they quietly accumulated shares through complex financial maneuvers, all while staying below the 5 percent threshold. But their clandestine tactics didn’t go unnoticed. The French financial services watchdog launched an investigation, revealing LVMH’s true intentions. It was exposed that they sought not just financial gain but also a stronger grip on the iconic fashion house. Caught in their own web of deception, LVMH faced consequences. They agreed to distribute their substantial 23 percent stake in Hermès to shareholders and institutional investors. Additionally, LVMH vowed to refrain from further share acquisitions for five years. This chapter reminds us that even the shrewdest strategists can stumble and fall short in their pursuit of dominance.

The Future of LVMH and the family of the richest person in the world

Arnault shows no signs of slowing down at age 72. He continues to hunt for new acquisitions to add to LVMH’s portfolio of over 75 brands. His five children all hold senior positions in the LVMH empire, positioning the company for long-term family control.

  • Antoine serves as CEO of Christian Dior SE
  • Alexandre is EVP of production and communication of Tiffany
  • Delphine is Chairman and Chief Executive Officer of Christian Dior Couture.
  • Jean is director of watches development and marketing at Louis Vuitton
  • Frederique is CEO of Tag Heuer

With an unparalleled ability to invest wisely, Bernard Arnault stands as a force to be reckoned with. His wealth and influence have not only revitalized renowned brands but have also positioned him as a dominant figure in the global luxury market. As the richest person in the world, Arnault’s reign shows no signs of faltering. With each strategic move and astute investment, he continues to shape the landscape of luxury. As the future unfolds, one thing remains certain: Bernard Arnault’s ability to invest well has cemented his status as a visionary leader and a true titan of the fashion world.

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