Who'll be crowned the king of bling?

Cartier owner Johann Rupert had the luxury jewellery market sewn up. Then Bernard Arnault bought Bulgari, writes John Lichfield

As jewel heists go, this was the Big One – the richest and shiniest ever. Bernard Arnault, the wealthiest man in Europe, and boss of the world's largest luxury goods empire, LVMH, yesterday smashed and grabbed his way to control of the officially "unsaleable" Italian jewellery company, Bulgari, bauble-maker to the stars. It was, of course, a perfectly legal raid, which could cost LVMH up to €4bn in shares and cash for a company which has been family-owned since 1884.

Mr Arnault, 61, has had a long rivalry with the second largest luxury goods empire in the world – PPR, built by another French self-made billionaire, François Pinault. The capture of Bulgari signals war on a glittering new front against Richemont, the jewel-laden, third largest global luxury goods empire, based in Switzerland and assembled by South African tycoon, Johann Rupert, 60.

The commercial clout of LVMH – with more than 2,500 shops around the world – will be used to challenge Richemont, and especially its leading jewellery brand, Cartier. This will also be a clash in styles between the urbane, arts-loving socialite Mr Arnault and the reclusive Mr Rupert.

LVMH (Louis-Vuitton-Moet-Hennessy) already has many of the greatest names in handbags (Louis-Vuitton), fashion (Dior, Givenchy); booze (Moet) and perfume (Guerlain). It was, until yesterday, relatively light on jewellery and watches, apart from TAG Heuer and Hublot.

Although Bulgari is the smallest of the world's leading jewellery companies, it is one of the most glamorous. Past clients include Elizabeth Taylor.

The company was started in Rome in 1884 by Greek immigrant Sotirios Bulgari. It has 260 shops worldwide. Adding Bulgari to the portfolio will increase LVMH's interest in the jewellery and watch sector by 70 per cent, but leave the company trailing behind Richemont, the undisputed world leader in top-class bling.

Maybe not for long. Market commentators, who were taken by surprise by LVMH's shopping expedition, predicted Mr Arnault would be looking for new jewellery and watch-making acquisitions soon.

They also predicted the deal could set off an avalanche of wider takeovers in a luxury goods sector. Sales to China, Russia and India are booming and Goldman Sachs predicted this week that "600 million new consumers are set to enter the [luxury goods] market by 2025".

LVMH's coup in capturing Bulgari – frequently said "not to be for sale at any price" – interrupted a run of bad publicity for the Paris-based company. One of the Arnault empire's "founder members", the fashion house Christian Dior, was trailed through the mud last week by the "I-love-Hitler" comments of its British chief designer, John Galliano (since fired). In recent months, LVMH has been in an acrimonious takeover battle with the posh, French handbag and scarf maker, Hermes. LVMH acquired 20 per cent of Hermes shares late last year, despite frequent warnings by the smaller, independent company that such interest was regarded as "hostile". Mr Arnault and LVMH have insisted they are merely courting Hermes in search of "partnerships" and "synergies".

The acquisition of the loss-making Bulgari seems to have been consensual. After secret negotiations concluded at the weekend, it was announced that LVMH would take all the family-owned majority stake in the Italian company. LVMH would swap 16.5 million of its own shares for the 152.5 million shares owned by the Bulgari family. This valued the 51 per cent family stake at €1.84bn. LVMH is also to offer €12.25 a share to other holders of Bulgari equity – which could bring the total cost of the deal to €3.7bn to €4bn. The Bulgari family will name two representatives to the LVMH board and the Bulgari chief executive, Francesco Trapani, will become head of LVMH's watches and jewellery division.

Mr Arnault started with a small family building company in the north of France in 1971. His early wheeling and dealing, to break into the luxury goods market, was often criticised. He has long since become one of the French great and good.

He fought, and lost, a vicious legal and commercial battle for control of Gucci with Pinault a decade ago. That apart, he has had few failures.

Sources within LVMH said the purchase of Bulgari was part of a change of strategy. Rather than focus on the struggle with its nearest rival, Pinault's PPR, LVMH has decided to take on Richement – and especially its Cartier jewellery brand. By using LVMH's commercial strength, Mr Arnault will challenge Richemont, Cartier and Johann Rupert head to head. The handbag war with Gucci is over. The bauble war has just been joined.

How the empires measure up

A. Lange and Söhne
Alfred Dunhill
Baume et Mercier
IWC Schaffhausen
James Purdey and Sons
Manufacture Robert Dubuis S.A
Ma Azzedine Alaia
Officine Panerai
Shanghai Tang
Vacheron Constantin
Van Cleef & Arpels
Also own 50 per cent of Polo Ralph Lauren Watch and Jewelry Company

Moët & Chandon
Dom Pérignon
Veuve Clicquot
Château d'Yquem
Belvedere Vodka
Domaine Chandon California
Donna Karan
Louis Vuitton
Marc Jacobs
Thomas Pink
Sir Jason Twist
Parfums Christian Dior
TAG Heuer
Le Bon Marché
The bulgari brand

* Exclusive jewellers Bulgari began life as a family business, founded in 1884 by Sotirio Bulgari, a Greek-born silversmith who had moved to Rome. His sons, Giorgio and Constantio, worked alongside him, opening a flagship store (which still exists today and inspires the décor of Bulgari stores worldwide) on the Via Condotti in 1905.

* The next generation looked beyond the refined French goldsmith tradition in which their father worked, referencing the Italian Renaissance. Their pieces suited perfectly the newly emergent jet-set and movie star crowd, whose patronage cemented Bulgari's reputation for luxury and elegance.

* After expanding internationally in the Seventies to New York, Geneva, Monte Carlo and Paris, the Bulgari group moved into watchmaking and, eventually, perfumes in the Nineties, before listing on the Milan Stock Exchange in 1995. This listing received a boost from the following year's launch of bags, scarves and eyewear, which continue to sell well as status pieces

* The Bulgari group finally opened a hotel in Milan in 2004, paving the way for other brands that have done so since, such as Missoni and Moschino. Its name is synonymous with exclusivity the world over, with its signature marbled logo and hushed, hallowed stores conjuring an old-school luxury that is rarely found in these days of internet shopping and bargain hunting.

Johann Rupert, 60 - Estimated fortune: $2.3bn

The chief executive of the Swiss company Richemont since 1988. Famous in South Africa, he's been described as the country's "very own Warren Buffett", while the Financial Times gave him the nickname "Rupert the Bear" for predicting the world economic crisis in 2006. The son of the late business tycoon Anton Rupert, he co-owns two of South Africa's best-known vineyards and one of the country's most exclusive golf clubs. He helped create the Laureus Sport for Good Foundation, which funds projects using sport to tackle social issues. Chancellor of the University of Stellenbosch in South Africa, he abandoned his degree for merchant banking in New York. He lives with his wife Gaynor and his three children near Stellenbosch.

Bernard Arnault, 61 - Estimated fortune $23bn

Chief executive of LVMH Moët-Hennessy Louis Vuitton, Mr Arnault began with a small family public works company in 1971. By several strokes of fortune (some say genius; others say ruthlessness) he found himself owning Christian Dior and then, in 1987, being invited to "save" the recently merged handbags and luxury drinks company LVMH. He has since, mostly by acquisitions, built the group to be the largest luxury goods company in the world. Mr Arnault has become part of the French political and art establishment. His plans for a futuristic LVMH foundation and museum in the Bois de Boulogne to house his large art collection were recently halted in mid-construction by a neighbours' revolt. He lives with his second wife, the Canadian pianist Hélène Mercier-Arnault.

Start your day with The Independent, sign up for daily news emails
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45,000: SThree: SThree Group have been well e...

Ashdown Group: IT Manager / Development Manager - NW London - £58k + 15% bonus

£50000 - £667000 per annum + excellent benefits : Ashdown Group: IT Manager / ...

Recruitment Genius: Sales Consultant / Telemarketer - OTE £20,000

£13000 - £20000 per annum: Recruitment Genius: Scotland's leading life insuran...

Ashdown Group: Training Programme Manager - City, London

£40000 - £45000 per annum + benefits : Ashdown Group: Training Programme Manag...

Day In a Page

Where the spooks get their coffee fix: The busiest Starbucks in the US is also the most secretive

The secret CIA Starbucks

The coffee shop is deep inside the agency's forested Virginia compound
Revealed: How the Establishment closed ranks over fallout from Loch Ness Monster 'sighting'

How the Establishment closed ranks over fallout from Nessie 'sighting'

The Natural History Museum's chief scientist was dismissed for declaring he had found the monster
One million Britons using food banks, according to Trussell Trust

One million Britons using food banks

Huge surge in number of families dependent on emergency food aid
Excavation at Italian cafe to fix rising damp unearths 2,500 years of history in 3,000 amazing objects

2,500 years of history in 3,000 amazing objects

Excavation at Italian cafe to fix rising damp unearths trove
The Hubble Space Telescope's amazing journey, 25 years on

The Hubble Space Telescope's amazing journey 25 years on

The space telescope was seen as a costly flop on its first release
Did Conservative peer Lord Ashcroft quit the House of Lords to become a non-dom?

Did Lord Ashcroft quit the House of Lords to become a non-dom?

A document seen by The Independent shows that a week after he resigned from the Lords he sold 350,000 shares in an American company - netting him $11.2m
Apple's ethnic emojis are being used to make racist comments on social media

Ethnic emojis used in racist comments

They were intended to promote harmony, but have achieved the opposite
Sir Kenneth Branagh interview: 'My bones are in the theatre'

Sir Kenneth Branagh: 'My bones are in the theatre'

The actor-turned-director’s new company will stage five plays from October – including works by Shakespeare and John Osborne
The sloth is now the face (and furry body) of three big advertising campaigns

The sloth is the face of three ad campaigns

Priya Elan discovers why slow and sleepy wins the race for brands in need of a new image
How to run a restaurant: As two newbies discovered, there's more to it than good food

How to run a restaurant

As two newbies discovered, there's more to it than good food
Record Store Day: Remembering an era when buying and selling discs were labours of love

Record Store Day: The vinyl countdown

For Lois Pryce, working in a record shop was a dream job - until the bean counters ruined it
Usher, Mary J Blige and Will.i.am to give free concert as part of the Global Poverty Project

Mary J Blige and Will.i.am to give free concert

The concert in Washington is part of the Global Citizen project, which aims to encourage young people to donate to charity
10 best tote bags

Accessorise with a stylish shopper this spring: 10 best tote bags

We find carriers with room for all your essentials (and a bit more)
Paul Scholes column: I hear Manchester City are closing on Pep Guardiola for next summer – but I'd also love to see Jürgen Klopp managing in England

Paul Scholes column

I hear Manchester City are closing on Pep Guardiola for next summer – but I'd also love to see Jürgen Klopp managing in England
Jessica Ennis-Hill: 'I just want to give it my best shot'

Jessica Ennis-Hill: 'I just want to give it my best shot'

The heptathlete has gone from the toast of the nation to being a sleep-deprived mum - but she’s ready to compete again. She just doesn't know how well she'll do...