In a move that has stirred the luxury goods industry, Bernard Arnault, chairman and CEO of LVMH, has taken a personal equity stake in Richemont, the parent company of Cartier. The exact size of Arnault’s shareholding in Cie Financiere Richemont SA remains undisclosed, but sources describe it as “small” and part of a broader investment portfolio owned by the Arnault family.
Arnault’s acquisition is currently intended solely as an investment, according to an anonymous source discussing the confidential matter. This development was revealed in a comprehensive profile of Arnault published in Bloomberg Businessweek. Following the news, Richemont shares saw an increase of up to 3.1% in Zurich, although they have dipped 2.4% over the past year. LVMH shares also experienced a 0.7% rise in Paris.
Representatives for both Arnault and LVMH Moët Hennessy Louis Vuitton SE declined to comment on the matter. LVMH, renowned as the world’s leading luxury goods company, boasts a market capitalization of approximately $391 billion, making it Europe’s third-most-valuable company. In comparison, Richemont has a market value of $91.3 billion.
Arnault’s investment in Richemont has sparked curiosity about his intentions, especially given Richemont’s strong defence against potential takeovers. Richemont’s chairman, Johann Rupert, holds 51% of the voting rights despite owning only 10.2% of the capital, emphasizing his desire to keep the group independent.
In its latest annual report, Richemont noted that as of March 31, there were no other significant shareholders with at least 3% of the voting rights. At LVMH’s annual results presentation in January, Arnault praised Richemont’s management and its renowned brands, Cartier and Van Cleef & Arpels, calling Rupert “an exceptional leader.”
“I have no desire to disturb his strategy,” Arnault stated. “I understand he wishes to remain independent and I think that’s very good. If he needs support to maintain his independence, I will be there.”
This isn’t Arnault’s first strategic move in the luxury sector. Fourteen years ago, LVMH invested in Hermes International SCA, using equity derivatives to amass a 23% stake. Despite Arnault describing the move as “friendly,” Hermes successfully fought back, and LVMH eventually divested its holding.
LVMH’s expansive portfolio includes fashion brands such as Loewe, Celine, and Fendi, as well as Sephora and the Dom Perignon and Moët & Chandon Champagne brands. Its last major acquisition was the $16 billion purchase of Tiffany & Co, the largest deal in the luxury industry to date.
With LVMH also owning jewellery brands Bulgari, Fred, Chaumet, and Repossi, any potential takeover of Richemont could attract antitrust scrutiny due to the overlap in the jewellery sector. Arnault’s wealth was recently estimated at about $203 billion, placing him third behind Jeff Bezos and Elon Musk, according to the Bloomberg Billionaires Index.
As the luxury industry watches closely, the implications of Arnault’s stake in Richemont remain to be seen, promising an intriguing future for these two titans of high-end goods.
Main Image: Vogue Business
