Arnault Tightens His LVMH Control With $1.6 Billion Buying Spree

French billionaire Bernard Arnault has long sought to tighten his control over LVMH, the luxury conglomerate he founded almost four decades ago. This year, his efforts have gone into overdrive.

Over a period of eight months starting in February, the 76-year-old quietly bought roughly €1.4 billion ($1.6 billion) worth of LVMH shares, according to Paris stock market filings. The purchases through holding companies occurred amid a sharp price decline triggered by weaker earnings and a broader industry retreat.

The sustained buying blitz brings Arnault and his family closer to owning half of the high-end brand juggernaut, which he started in 1987 and has grown through acquisitions and expansion to become France’s largest company, with a market capitalisation of €302 billion. The share purchases also underscore how throughout his career Arnault has kept his empire centred on LVMH rather than diversifying his holdings.

A spokesperson for LVMH declined to comment on the stock purchases or the reasons behind them.

Arnault has a net worth of $195 billion, according to the Bloomberg Billionaires Index. His stake in LVMH, which makes up by far the biggest chunk of his personal fortune, stood at 49 percent of the capital and nearly 65 percent of voting rights at the end of last year. The sprawling firm’s labels range from Louis Vuitton and Dior to Cognac producer Hennessy and jeweller Bulgari.

During this year’s stock-buying spree, Arnault has so far purchased some 2.5 million LVMH shares, representing about 0.5 percent of the company’s stock, through his family’s closely held Financiere Agache and their Christian Dior SE, a listed firm whose only activity is owning LVMH shares.

The dozens of filings for the transactions show Arnault paid an average of about €566 a share — and as little as €448 at one point in June — compared with the €612 closing price on Friday, according to Bloomberg calculations. The total volume purchased during the period ending mid-September was significantly higher than in previous years, according to shareholding figures in annual reports, and occurred against a backdrop of a series of weak quarterly financial figures. The stock has since rebounded after LVMH reported an unexpected return to sales growth earlier this month.

‘Strong Convictions’

“What is noteworthy is that Bernard Arnault has such strong convictions about LVMH,” said Frederic Genevrier, an analyst at AlphaValue, who said the purchases may reflect Arnault’s desire to own an “absolute majority” of the firm even though he already has nearly two-thirds of voting rights.

The roughly €1.1 billion that Financiere Agache spent on LVMH stock would have been better used for wealth diversification, according to Genevrier, who calculates from earnings reports that Arnault’s investments outside LVMH are worth a relatively small €4 billion compared with his overall fortune.

Financiere Agache’s activity is centered on luxury goods through Christian Dior and LVMH, while it also holds an unspecified “portfolio of diversified financial investments,” according to its website.

Arnault also invests via other vehicles including Agache, which acquired a majority stake last year in football club Paris FC and backs tech-focused venture fund Aglae Ventures, whose website shows investments in a range of companies from Airbnb Inc. and ByteDance to Netflix Inc. and Spotify Technology SA. LVMH and Arnault also back the private equity firm L Catterton, which specializes in consumer goods.

Ever since the 1980s, when he acquired fashion house Christian Dior and founded LVMH, Arnault has maneuvered to consolidate his control. One of his biggest transactions came in 2017 when he offered to buy out minority shareholders in Christian Dior SE for €12 billion. At the time of the deal, Arnault hinted at his long game, saying the price might be a bit expensive “but in 30 years we’ll be happy we did it.”

The transaction simplified a complicated ownership structure and came just as a Chinese-led luxury boom was gathering steam which, along with pandemic-era revenge shopping, helped propel Arnault to become for a time the world’s richest person in 2022. By the end of last year, the Arnault family owned 97.5 percent of Christian Dior, nearly all through Financiere Agache, compared with 74 percent before the offer.

This year’s stock purchases during a downturn hark back to a similar move highlighted by Arnault nearly a decade ago. Speaking at the Oxford Union debating society in 2016, he recounted how he bought LVMH shares after the 2008 financial crisis, which he said at the time went on to more than triple in price.

By Tara Patel

Disclosure: LVMH is part of a group of investors who, together, hold a minority interest in The Business of Fashion. All investors have signed shareholders’ documentation guaranteeing BoF’s complete editorial independence.