LOUIS VUITTON & MOËT
HENESSY’S EMPIRE LVMH MoëtHennessy Louis Vuitton S.E is a French-based luxury goods holding company. It owns a vast portfolio of brands that are, to a large extent, run autonomously. The business activities of the holding company are divided into five main groups: wines and spirits, fashion and leather goods, perfumes and cosmetics, watches and jewellery and selective retailing. This luxury holding company is an example of how merger and acquisition transaction can contribute to building an indisputable market position in luxury goods industry and result in its economic growth. The 1987 Merger
However, Arnault had his own ambitions and
This year became undoubtedly one of the most
soon, with the help of the French investment bank
remarkable moments in the beginning of building
Lazard Freres and the British liquor giant Guin-
the luxury goods conglomerate. In June 1987, there
ness PLC, he secured a 45% controlling interest of
was a USD 4 billion merger between Louis Vuitton
LVMH stock for himself. Despite Louis Vuitton’s
and MoëtHennessy that allowed Louis Vuitton
strong performance, accounting for 32% of LVMH
to expand its investments in the luxury business.
sales, Recamier soon could hold onto his stake
The further attribute of the previously mentioned
in LVMH against Arnault who was supported by
transaction was that the merger respected the
Moëtand Hennessy families. The courts eventually
autonomy of each company over its own mana-
favored Arnault, and Racamier stepped down to
gement and subsidiaries. As Moët Hennessy was
create another luxury goods conglomerate.
three times the size of Louis Vuitton, its president,
In the course of time, Arnault weeded
Alain Chavalier, was named the chairperson of the
out Vuitton’s top executives and began to bring
new holding company, Moët Hennessy Louis Vuit-
together his fragmented luxury empire. After a cer-
ton (LVMH), and Recamier became executive vice
tain period of time, Arnault started to increase his
-president. After several disputes and legal battles
interest in Guinness from 12 to 24%, fueling rumors
between Racamier and Chevalier over the method
that Guinness would be his next target. However,
of running the conglomerate, the young property
Arnault’s percentage in Guinness was proportio-
developer and financial engineer Bernard Arnault
nately equal to the 24% Guinness controlled of
was invited to acquire stock in the company.
LVMH. In the early 1990s, Arnault controlled the 50