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The megadeal — one of the largest in LVMH history — also deflected media attention from the Galliano scandal, and from the war of words with another family-owned company, Hermès, in which Arnault and LVMH had quietly amassed a significant chunk.
The executive has said little about the Hermès investment, vowing that LVMH would be a “peaceful but not passive” shareholder in the maker of Birkin bags and silk scarves. “We are very pleased to be a shareholder in this very fine company. We want to support the family shareholders, and we want to support the management,” he said last February.
Nonetheless, Hermès accuses LVMH of a creeping takeover, and a French court cleared the way for Hermès to group family-owned shares into a nonlisted holding company by year-end.
That may freeze LVMH’s stake at 21.4 percent, but few observers question the wisdom of Arnault’s investment. Sources estimate he has realized a capital gain in excess of 2 billion euros, or $2.68 billion at current exchange.
Arnault also continued to build his stake in Carrefour SA, which has faced an uphill climb convincing investors of its turnaround potential. Blue Capital, the investment fund owned by Groupe Arnault and Colony Capital, now controls 16.02 percent of the share capital and 22.03 percent of the voting rights.
The executive also parked his money in other non-luxury places via L Capital, the private equity arm of LVMH. These included a 60 percent stake in fashion firm Captain Tortue Group, which sells children’s and women’s wear under Capt’n Tortue, Miss Captain, Lady Captain and Java Lingerie brands; and a 35 percent stake in French fashion accessories license group TWC L’Amy, which does watches, eyewear, jewelry and leather goods.
Meanwhile, Arnault started reshaping executive ranks at LVMH, tapping Danone SA executive Jordi Constans to succeed Vuitton’s Yves Carcelle effective at the end of 2012; and naming Christopher de Lapuente from Procter & Gamble to become global president and chief executive officer of Sephora. More moves are in the works: According to sources, Michael Burke, ceo of Fendi, is being shifted over to head Bulgari, while Pietro Beccari, executive vice president of marketing and communications at Louis Vuitton, will succeed Burke at Fendi.
All this activity did not go unnoticed. Arnault was named a Grand Officer of the Legion of Honor on July 14, Bastille Day, while in Washington, he received the Corporate Citizenship award from the Woodrow Wilson International Center for Scholars.
In his acceptance speech, Arnault stressed LVMH’s dedication to a “moral code that is nonnegotiable, even if this sometimes means taking very difficult and public decisions because they are simply the right thing to do, whatever the impact on our business,” an apparent reference to the firing of Galliano. “To receive this award tonight in your presence is not only an honor, but also a very happy, powerful and poignant occasion for me.”