From Tod’s to Moncler: Bernard Arnault, the Luxury Industry Titan and a Once-in-a-Century Investment Genius-Part 1

For Bernard Arnault, CEO of LVMH, the ambition to create a monopoly in the luxury industry has never faded.

Even after facing setbacks like the failed acquisition of Hermès, Bernard Arnault has never stopped pursuing his rivals. Just in 2024, Bernard Arnault made two bold moves. LVMH invested in the Italian luxury down jacket brand Moncler. Moreover, Bernard himself directly acquired a minority stake in Richemont Group. However, both Bernard and Richemont denied any intentions of a full acquisition regarding this deal.

From Tod’s to Moncler: Bernard Arnault, the Luxury Industry Titan and a Once-in-a-Century Investment Genius ????

Bernard Arnault's Relentless Ambition to Dominate the Luxury Sector ?????

For Bernard Arnault, CEO of LVMH, the ambition to create a monopoly in the luxury industry has never faded.

Even after facing setbacks like the failed acquisition of Hermès, Bernard Arnault has never stopped pursuing his rivals. Just in 2024, Bernard Arnault made two bold moves. LVMH invested in the Italian luxury down jacket brand Moncler. Moreover, Bernard himself directly acquired a minority stake in Richemont Group. However, both Bernard and Richemont denied any intentions of a full acquisition regarding this deal.

1989: The Starting Point of the Empire

After successfully acquiring LVMH in 1989, Bernard Arnault became the largest shareholder of this luxury conglomerate. He ousted Henry Racamier, the then-president of Louis Vuitton, from his family business. Using similar strategies in the luxury sector—removing founders, splitting family power—he proceeded to acquire companies like Givenchy and DFS.

Investors once labeled him a "Predator" rather than a "Creator." This "wolf in sheep's clothing" now controls as many as 75 fashion and luxury brands, including globally renowned names such as Louis Vuitton and Dior.

Breaking Family Traditions in French Luxury ??????

Arnault’s disruptive emergence overturned the French luxury industry’s long-held family values and cultural traditions. Many saw him as more of a combative "American businessman" than a craftsman of the French luxury industry. Yet, such criticisms didn’t deter him from his path of conquest.

As the luxury industry steps into a new era, Bernard Arnault’s empire leaves a legacy of strategic acquisitions. What patterns can be observed in his investments, and which areas is he now targeting?

01. How Did Bernard Arnault Start His Acquisition Journey? ???

In September 2024, LVMH reached an agreement with Double R, controlled by Moncler CEO Remo Ruffini, to purchase 10% of Double R’s shares. This raised LVMH’s stake in Double R to 22%. According to the agreement, the funds would help Double R increase its stake in Moncler over the next 18 months, indirectly boosting LVMH’s control over Moncler.

According to Citigroup analysts, if Double R further raises its Moncler holdings, LVMH would indirectly hold 4% of Moncler shares. Additionally, LVMH secured the rights to appoint one board member at Moncler and two board members at Double R, thus embedding LVMH’s influence into Moncler’s decision-making process.

Although a full acquisition of Moncler seems unlikely in the short term, analysts speculate otherwise. Many of LVMH’s 70+ brands were acquired through aggressive and sometimes ruthless methods. Bernard Arnault once said, "In business, the secret to success is seizing opportunities," a mantra he has consistently practiced.

02. From a Music Enthusiast to a Business Tycoon ??→??

Born in France’s northern industrial region, Bernard Arnault had a passion for music before venturing into business. He ultimately didn’t become a pianist but joined his family’s construction business in 1971 after graduating from an engineering school in France.

His business acumen first surfaced that same year during a taxi ride in New York. When he asked the driver if he knew the French President Georges Pompidou, the driver replied firmly, "I only know Christian Dior."

After taking over the family business, Bernard Arnault began envisioning a globally influential French enterprise. His ambitions couldn’t be confined to the construction sector, so he set his sights on acquiring Dior, the world-famous brand, as his starting point.

Strategic and Ruthless Decision-Making ?????

Arnault’s approach is defined by seizing opportunities and decisive action. In 1984, when Christian Dior’s parent company Boussac faced bankruptcy, Arnault decisively acquired it. Similarly, in 1992, he ensured Louis Vuitton became one of the first luxury brands to enter China, benefiting from the early wave of globalization.

Yet, Arnault's ruthlessness as a businessman is equally evident. The French government had hoped his acquisition of Boussac would save the 15,000-employee textile giant. However, Arnault’s true intentions were clear: to acquire Dior and the brand’s distribution channels.

Following the acquisition, he laid off 9,000 employees, sold off most of the business, and pocketed $500 million, along with the Dior brand.

The Formation of LVMH ???

LVMH’s earliest form emerged in 1987 when Louis Vuitton merged with Mo?t Hennessy. Amid internal conflicts following the merger, Arnault began increasing his stake in the company, ultimately taking full control and laying the foundation for today’s LVMH luxury empire.

Bernard Arnault's Two "Waterloos" in Acquisitions ??

However, Bernard Arnault has not always succeeded in his ventures. Around the turn of the millennium, he set his sights on acquiring Gucci. At the beginning of 1999, LVMH launched its acquisition campaign by quietly purchasing 5% of Gucci's shares on the open market. Shortly thereafter, they ramped up efforts, acquiring an additional 9.5% stake from Prada's CEO Patrizio Bertelli. Continuing to increase its holdings, LVMH pushed its ownership stake to a high of 34.4%, seeking a seat on Gucci's board. Yet, Gucci did not yield.

Gucci’s Defense: The "Poison Pill" Strategy ???

In response to this takeover attempt, Gucci's CEO Domenico Del Sole launched a counteroffensive famously known as the "Poison Pill Plan." Del Sole leveraged a pre-existing anti-takeover mechanism established by Gucci’s former shareholders, the Baring Fund, which allowed the issuance of new shares and provided interest-free loans to the management team.

Through this plan, Del Sole created an Employee Stock Ownership Plan (ESOP), issuing 42% new shares, equivalent to 37 million newly issued equity shares. This ESOP allowed employees to buy the new shares using interest-free loans from the company, effectively diluting LVMH's stake from 34.4% to 20%.

Turning to PPR for Support

To completely fend off LVMH, Gucci turned to PPR Group (now Kering) for assistance, agreeing to sell 42% of its equity to PPR. While this move diluted LVMH’s holdings further, it also triggered a wave of lawsuits. LVMH repeatedly challenged Gucci’s "Poison Pill Plan" in court, claiming it violated regulations. After two months of legal battles, a Dutch court ultimately upheld Gucci's right to sell 42% of its shares to PPR, bringing the acquisition battle to an end.

A Slow and Steady Attempt with Hermès ???

Unlike the rapid Gucci acquisition attempt, LVMH’s approach to Hermès was more gradual. Between 2001 and 2002, LVMH, through a subsidiary, acquired 4.9% of Hermès' shares. By 2007, LVMH discreetly increased its stake via financial derivatives.

By the end of 2010, LVMH officially announced that it had accumulated 14.2% of Hermès' shares.

Hermès Family's Countermove

In response, the Hermès family established a private holding company, H51 SAS, which granted family members priority rights to purchase shares. Through this entity, the family locked in over 50% of Hermès' shares. According to the agreement, these locked shares could only be sold if 75% of family members approved.

This strategy successfully thwarted LVMH's hostile takeover of Hermès, preserving the brand's independence. ??