Bernard Arnault has proved once again that he misses a good fight.
France’s wealthiest man tries to pull out of a high-profile transaction this week LVMH, the luxury group he controls, announced that it was planning to purchase a US jeweler The collapse of the largest takeover in the Tiffany & Co. industry became increasingly ugly, with Tiffany accusing LVMH of being a “faux hand” and the French side calling for the US company to run poorly.
Adding to the drama, Arnault did not walk away with a $ 16 billion prize. Having received help from the French government – which the company essentially calls for a postponement of the deal – Arnault underscored its reach to the highest political constituencies. The move showed his desire to surprise Vasant to get the opponents on their way.
But Arnault seems to have made up his mind about Tiffany largely alone, an unusual step in the takeover with expensive lawyers and consultants. According to people familiar with the situation, the 71-year-old cut some of his close associates in the deal.
The account is based on interviews with people close to the LVMH and Tiffany Accords, who spoke on condition of anonymity over private deliberations. LVMH and Tiffany declined to comment for this story.
Other than Arnault, only a small group of executives, including chief financial officer Jean-Jacques Gioni and managing director Antonio Belloni, were part of the inner circle to move down a path, one of the people said. In contrast, most external consultants avoided speculating what the next step might be, others said.
Tiffany Dust-Up is the epitome of Arnault’s luxurious management style, renowned by the world’s largest luxury conglomerate to date, ranging from Champaran to Dior Haute Couture to strong removacas and luxury hotels. In that bouquet of high-end brands, Arnault wanted to inject Tiffany, giving her a recognizable name in the still-shattered jewelry market and a large footprint in North America.
It all started amicably in November when the deal was announced. Arnault spoke of Tiffany as an American icon and a symbol brand. The approach comes just weeks after the billionaire flew to Texas to join President Donald Trump at the inauguration of the Louis Vuitton factory.
For Tiffany, joining the Arnault family promised access to a powerful branding machine, which has helped grow small or family businesses such as Bulgari or Loro Piana. Shoppers from Beijing to London pampered themselves with expensive items to smooth the Buoyant luxury sale for the deal.
But first the boom and then mutual appreciation was frozen. Within weeks, the global economy and the luxury-goods industry in particular, were transformed by the worldwide coronovirus epidemic. China closed, high-rolling shoppers stayed home and boutiques around the world closed. Spending on diamonds, handbags and furs brought a virtual halt.
By the end of March, with a lot of lockdowns entering Europe, LVMH began to have second thoughts about the price it was willing to pay for Tiffany. Bloomberg News reported that it considered buying in the stock market for under $ 135. In the end, LVMH trusted, but there were no indications that all was not well in the LVMH-Tiffany marriage.
By June, after the epidemic had spread to Tiffany’s US home market, the development suggested that the road was still rocky. The jeweler was given more leeway by the lenders to meet the debt obligations. On August 25, LVMH stated that it reserved the right to contest Tiffany’s decision to extend the closing deadline, a clear indication that the relationship had soured. Two weeks later, Arnault went public and dropped the bomb.
The French Foreign Ministry letter asked LVMH to give a date of 31 August to delay the deal, but the chairman of Tiffany only heard about the letter on 8 September, with one person familiar with the situation.
Tiffany was given permission to view the non-translated foreign affairs letter in Paris, but it was given only for a few minutes and could not take photos, the person said – only a brief glance at the Mona Lisa treatment. Louvre before walking with equal to.
An indirect route (in Tiffany’s case through a government order) towards its goal is a signature Arnault step. He received Muniker “Wolf in a cashmere coat” for his high-stakes, decades-from-prisoner-for-prisoners approach, which helped him win control of over 70 brands.
“Bernard Arnault is possibly the world’s most successful investment banker — that’s how he gathered LVMH through a long period of acquisitions over time,” said Flavio Serreda, an analyst Jefferies International Limited
Whereas it made Arnoul fabulously wealthy – he ranks as the sixth richest person in the world, with total earnings of $ 86.5 billion. Bloomberg Billionaires Index – The family business he bought ranged from Loro Piana to Guarlain Perfume Emporium, which went away with a profitable profit.
Born into a small-town industrial family, Arnault honed his skills in the 1980s by removing valuable brands from ailing shell companies, Dior and accessories company Louis Vuitton. That approach laid the foundation for his meteorite to grow. He later added the champagne and cognac brands, which often cut associates and jobs, igniting his credibility as a tough business tycoon.
One of the biggest names in the luxury world, Gucci’s control of home for two decades before the Battle of Arnault is a case study of the billionaire’s desire to join a drawn-out battle. The Italian leather-goods company eventually turned to arch-rival François Pinault – who stepped in as a white knight when he called for Gucci’s help – but ended the competition for years before ending up as one of Arnault’s few defeats. Drawn up to.
Perhaps his most audacious move occurred nearly a decade ago, when Arnault quietly began to stake a cross-town rival Hermes International. With more than one luxury brand seeking to buy another, it was seen as an attack on a French institution that prized its independence and deep heritage for the founding family.
Things went haywire in the next two years, by which time LVMH had increased its stake to over 20%. Hermes sued the luxury group, accusing it of insider trading and stock manipulation. Attacking his opponent with accusations of unfair competition and profanity, Arnault responded with a counterset.
The matter was resolved years later, and LVMH eventually settled its stake. But it showed once again that Arnold would not return away from the dust-mud, and even where he does not emerge victorious, he has not quenched his hunger for more.
Tiffany may also find that Arnault has reduced her fighting spirit. For now, both sides are locked in a legal standoff. Tiffany filed a lawsuit on September 9 in a Delaware court to enforce the agreement. LVMH prepared a counter-notification, stating that Tiffany’s management performance during the epidemic had been “very disappointing” and ended its decision to pay dividends in times of crisis.
The stakes are particularly high this time for Arnault, not only because his biggest transaction is still at risk. The ensuing legal battle can turn into a long and costly distraction when the luxury world needs to focus on its recovery.
Prohibiting the agreed deal also threatens to leave a mark on Arnold’s reputation, even though LVMH says it has no choice but to close the whole thing.
LVMH said that the French government demanded that the deal be postponed until next year as US tariff threats are disputed. Bloomberg reports that the company has denied that he played with one hand, with a person familiar with the government’s thinking that Arnault asked him for help to pull out of the purchase. A spokesperson called the allegations “malicious and completely baseless”.
And while relations are tense, LVMH may always be ready to return to the table. Tiffany must cut the price to reflect the new reality, a person familiar with the situation said. Investors Having not fully given a deal, either.
Arnold can always rely on his deep connections and marketing machine to help keep him from coming back home, at least from the Tiffany saga. He owns the flagship business daily Les Echos as well as the Radio Classic, which incorporates business topics in his morning shows. A keen piano player, his streaks extend to the arts — he pledged 200 million euros ($ 237 million) to rebuild Notre Dame Cathedral, largely destroyed by fire last year.
But for the time being it seems that Tiffany has survived the prize Arnault, the epidemic has proved a formidable rival even for a man who has gained and won his fair share of the fight in the last three decades .
– Assisted by Geraldine Emiel, Aaron Kirchfeld, Dinesh Nair and Philip Bryan Tabu