[News Inside] From Construction Business to Building a Luxury Empire... The King of Luxury

Bernard Arnault LVMH Chairman
Renowned for Aggressive M&A in Luxury Industry... Management Limits Exposed After Failed Tiffany Acquisition in the US

▲Bernard Arnault, Chairman of LVMH [Image source=Reuters Yonhap News]

[Asia Economy Reporter Kwon Jae-hee] The acquisition battle between Louis Vuitton Mo?t Hennessy (LVMH) and Tiffany & Co., considered the largest 'mega deal' in the luxury industry, is facing the risk of collapse. Although a dispute over the truth surrounding the acquisition battle is ongoing, one thing is clear: the aggressive merger and acquisition (M&A) management style of Bernard Arnault, chairman of LVMH who built a luxury empire, has been halted.

Arnault, who is often called the 'Pope of Fashion' and the 'Emperor of Luxury,' did not start his career in the luxury industry.

Born in 1949 in Roubaix, Nord, northern France, as the son of a wealthy businessman, Arnault was brilliant enough to enter the prestigious ?cole Polytechnique early. ?cole Polytechnique, along with the National School of Administration, is a prestigious institution that has produced many French political and business elites. After graduating in 1971, he received business training at Ferret-Savinel, a construction company run by his father. Showing great business acumen, he proposed selling the construction division to his father just five years after joining, and after selling the business for 40 million francs in 1976, he shifted his focus to real estate under a new name, 'Ferinel,' achieving significant success. In 1979, he succeeded his father as president of Ferinel.

[Image source=Reuters Yonhap News]

Then, suddenly, he moved to the United States in 1981. This was because Fran?ois Mitterrand, a Socialist Party candidate, was elected president, and Arnault felt his political orientation did not align with the new government.

His move to the U.S. became the cornerstone for building his luxury empire. When Arnault visited New York, he asked a taxi driver what came to mind when thinking of France, and the driver answered 'Dior.' He was struck by the fact that the driver knew luxury brands but not the name of the French president.

However, he did not immediately enter the luxury business. In the U.S., he operated the construction business he had in France, but the results were poor. Three years later, when Mitterrand's Socialist government shifted to a more conservative stance, Arnault returned to France and entered the luxury business. Upon his return, he acquired the parent company of Christian Dior, the Boussac Group, which was on the verge of bankruptcy in 1984, marking his official entry into the luxury industry.

[Image source=Reuters Yonhap News]

Upon acquiring Boussac, he eliminated businesses that did not fit the luxury image, such as the diaper business. He also laid off nearly 8,000 employees, and through his aggressive management style, he succeeded in turning the company profitable within two years. The acquisition of Boussac marked the beginning of his aggressive M&A strategy.

In 1989, the current form of LVMH was established through the merger of 'Mo?t Hennessy,' famous for champagne, and Louis Vuitton.

While managing his company, Arnault realized that acquiring existing luxury brands created more synergy than launching new ones. Subsequently, he acquired famous luxury brands such as Givenchy, C?line, and Fendi. He also expanded into cosmetics brands like Make Up For Ever and Benefit, as well as watch and jewelry brands such as Bulgari and TAG Heuer. Although he earned the reputation of a 'corporate raider' during this process, the brands that joined LVMH under Arnault's aggressive management saw rapid sales growth.

Last November, LVMH finally announced the acquisition of Tiffany for a staggering $16.6 billion (approximately 19 trillion KRW), leading to predictions that Arnault would surpass Bill Gates, founder of Microsoft, and Jeff Bezos, CEO of Amazon, to become the world's richest person.

▲Delphine Arnault (37), the eldest daughter considered the successor of Arnault

However, due to the severe impact of the COVID-19 pandemic on the luxury industry and speculation that the Tiffany acquisition price was inflated, the acquisition battle ultimately faced the risk of collapse. LVMH stated, "The French government requested a delay in the acquisition due to the tariff war with the United States," but Tiffany claimed that LVMH was using the French government as an exit strategy to withdraw from the acquisition battle. Eventually, Tiffany filed a lawsuit against LVMH in the Delaware Court of Chancery, demanding either the fulfillment of the acquisition contract or payment of damages.

Arnault has been severely affected by the COVID-19 pandemic. According to the Bloomberg Billionaires Index, his assets amount to $88.6 billion (approximately 105.1682 trillion KRW), ranking sixth in the world. This year alone, his wealth has decreased by $32.3 million (approximately 3.83 billion KRW).

Currently, his eldest daughter, Delphine Arnault (37), is emerging as his successor. A graduate of the London School of Economics, Delphine worked at consulting firm McKinsey & Company before becoming an LVMH board member at age 28. She is currently serving as deputy CEO of the Dior brand.