News LVMH founder Bernard Arnault acquires a stake in Richemont

French businessman Bernard Arnault, founder of the luxury goods group LVMH, has bought shares in Richemont, the rival Swiss-based conglomerate, according to Bloomberg and the Financial Times. The mere news of this acquisition sent Richemont’s share price up by 2.6%.

Neither group issued any comment on the matter. The report indicated that the stake is too small to be disclosed in public registers and is a personal investment by the Arnault family, one of the world’s wealthiest. Nevertheless, this investment could revive speculation about potential takeover scenarios among major luxury groups. which is a story that we talked about in detail in this article.

The latest news reinforces the likelihood of LVMH’s rise in the watchmaking arena, especially with the acquisition of SWIZA, owner of L’Epée 1839, known for its mechanical watchmaking marvels. As the LVMH group continues to expand, Cartier would be a valuable addition, being the second-largest in the Swiss watchmaking industry according to annual rankings by Morgan Stanley and Luxeconsult, with estimated sales of CHF 3.1 billion for 2023. It came second behind the giant Rolex, surpassing many large companies.

Richemont’s other watch brands, including Vacheron Constantin, which joined the club of billionaire watch brands for the first time last year (~CHF 1.1 billion in sales for 2023 according to Morgan Stanley), further illustrate its dominance. The Swiss group owns a range of big names in the watch industry, such as A. Lange & Söhne, Baume & Mercier, Cartier, IWC Schaffhausen, Jaeger-LeCoultre, Montblanc, Panerai, Piaget, Roger Dubuis, Vacheron Constantin, and Van Cleef & Arpels.

However, the sales of LVMH and Richemont are not limited to watches. Both giants are also leaders in the jewelry industry, with brands like Cartier, Van Cleef & Arpels, and Buccellati.

LVMH's jewelry department is one of the largest in the market, with brands like Bulgari, Chaumet, Dior Joaillerie, and Tiffany & Co., which LVMH acquired in 2021.

Johann Rupert, Richemont’s chairman, has long insisted on preserving the group’s independence and recently overhauled its management by appointing a new chief executive, Nicolas Bos, who formerly ran its Van Cleef & Arpels brand.

Arnault, known as a shrewd dealmaker, has previously used stealth to get closer to his targets. He stunned Hermès, the maker of luxury Birkin handbags, in 2010 when it was revealed he had built up a large stake through derivatives and intermediaries, eventually growing to over 23%. Arnault insisted at the time that he had no intention of taking control of Hermès, whose family backers fought back, and the stake was distributed to LVMH shareholders in 2014.