The Rise of the World's New Richest Man
According to the latest Forbes list of global billionaires, Bernard Arnault has a personal wealth of $233 billion, surpassing Musk's $195 billion, making him the world's richest man.
Arnault has achieved great success, from being a real estate developer to becoming a leader in the luxury goods industry. His success can be attributed to his ability, determination, and desire to succeed. He has acquired multiple luxury companies and uses them to cater to the wealthy.
Acquiring luxury companies was as easy as having money, but luck also played a role. After some negotiation, Arnault increased his stake and became a major shareholder. In 1981, Dior was in financial crisis. Arnault seized the opportunity and thus entered the luxury industry.
On the platform of Dior and LVMH, and he continues to expand. His personal assets amount to over 210 billion U.S. dollars. Arnault stated that compared to Microsoft, they are still relatively small.
Throughout Arnault's involvement in over 60 mergers and acquisitions at LVMH, three stand out as excellent examples of textbook-level business cases, worthy of being included in the Harvard Business School textbook.
Take advantage of the small for big
Compared to the real estate industry, which relies on bank loans and land policies and is often uncertain, the luxury industry relies on creativity and brand culture to command high premiums. It is not affected by policies, making it a sound business choice. One aspect that Arnault valued was that none of these tailor-born luxury founders were particularly skilled in business.
At the time, Christian Dior was simply an up-and-coming designer. Until 1946, Barsac supported him in establishing his own designer label and fashion house. However, Barsac was eventually forced to sell the brand, Dior, to the W Group when the company went out of business. Unfortunately, W Group also went bankrupt in 1981, and Dior faced another financial crisis.
At that time, the buyer valued the brand at 100 million dollars, while Arnault's capital was only 15 million dollars. Nevertheless, Arnault still took the risk. With five times leverage, Arnault was able to easily obtain ten times the earnings, earning him fame from the battle.
The hostile takeover against the poison pill program
Gucci is a family business. In the 1990s, as some luxury goods dealers became internationalized, competition increased greatly. This led to a crisis for traditional family businesses like Gucci, resulting in internal strife. Eventually, the company was sold to the Bahraini sovereign fund in the Middle East. After the Bahraini fund invested in Gucci, it restructured the company's family management in an internationalized manner. This involved replacing the CEO and creative director, which helped revive Gucci and make it a formidable competitor to Arnault's and LVMH.
However, Gucci's fragmented shareholding remains, providing Arnault with an opportunity. For a long time, he held 4.99% of Gucci's shares. Suddenly, he increased his holdings and extended an olive branch to the major shareholders of Gucci. This caused a high price recovery of the shares, and in a short period of time, he acquired 34% of Gucci's shares, catching Gucci off guard.
Gucci, being an old brand, had a complete set of solutions for malicious takeovers, which made Arnault's Waterloo. In summary, Gucci imposed inflation on its own stock. Arnault's shareholding plummeted from 34% to 20% after a large number of new shares were issued. This led to a lengthy legal battle of litigation and counter-litigation.
The betting capital faced legal sanctions
Arnault had his sights set on Hermès and signed betting agreements with three investment banks to help him acquire shares.
In 2008, he secretly purchased 4.9% of Hermes shares. When the stock betting agreement expired in 2010, the investment banks were unable to buy up to 17% of Hermes shares, allowing Arnault to smoothly acquire them. With 22% of the shares, Arnault became the largest shareholder of Hermès.
After successfully preventing Arnault's hostile takeover, Hermès decided to defend its rights through legal channels. Following a lengthy process of litigation, the two sides reached a settlement: Arnault reduced its stake to 8% and paid a penalty of 8 million dollars. However, despite this fine, Arnault had already profited from Hermes' shares, amounting to 3.8 billion dollars.
