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

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

LVMH
Moët & Chandon
Dom Pérignon
Krug
Veuve Clicquot
Mercier
Château d'Yquem
Hennessy
Glenmorangie
Ardbeg
Belvedere Vodka
Domaine Chandon California
Fendi
Donna Karan
Givenchy
Bulgari
Kenzo
Berluti
Louis Vuitton
Marc Jacobs
Loewe
Céline
Thomas Pink
Sir Jason Twist
Parfums Christian Dior
Guerlain
TAG Heuer
Zenith
Hublot
Chaumet
Sephora
DFS
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.

News
The surrealist comedian at the Q Awards in 2010
people
Life and Style
Six of the 76 Goats' cheese samples contained a significant amount of sheep's cheese
food + drink
News
Russell Brand arriving for the book launch in East London
peopleRussell Brand cancels his book launch debate due to concerns about the make-up of the panel
Arts and Entertainment
Contestants during this summer's Celebrity Big Brother grand finale
tvBroadcaster attempts to change its image following sale to US
PROMOTED VIDEO
Arts and Entertainment
Julianne Moore and Ellen Page are starring together in civil rights drama Freeheld
film
Arts and Entertainment
Sarah Dales attempts to sell British Breeze in the luxury scent task
tvReview: 'Apprentice' candidates on the verge of tears as they were ejected from the boardroom
Voices
New look: Zellweger at Elle's Women in Hollywood awards on Monday
voicesRenée Zellweger's real crime has been to age in an industry that prizes women's youth over humanity, says Amanda Hess
Arts and Entertainment
film

Marvel has released the first teaser trailer a week early after it leaked online

Extras
indybest
Life and Style
CHARGE BOOSTER: Aeroplane mode doesn't sound very exciting, but it can be a (phone) hacker's friend. Turning on the option while charging your mobile will increase the speed at which your phone battery charges
techNew book reveals how to rid your inbox of spam, protect your passwords and amplify your iPhone
Sport
Christiano Ronaldo enjoys his opening goal
champions leagueLiverpool 0 Real Madrid 3: Ronaldo and Benzema run Reds ragged to avenge thrashing from their last visit to Anfield
Arts and Entertainment
Awesome foursome: Sam Smith shows off his awards
music22-year-old confirms he is 2014’s breakout British music success
Arts and Entertainment
Sir Nicholas Serota has been a feature in the Power 100 top ten since its 2002 launch
art
News
Call me Superman: one of many unusual names chosen by Chinese students
newsChinese state TV offers advice for citizens picking a Western moniker
News
ebooksAn unforgettable anthology of contemporary reportage
News
Wilko Johnson is currently on his farewell tour
people
News
Let’s pretend: KidZania in Tokyo
educationKidZania lets children try their hands at being a firefighter, doctor or factory worker for the day
News
i100
Voices
'Irritatingly Disneyfied': fashion vlogger Zoella
voicesVicky Chandler: Zoella shows us that feminism can come in all forms
Life and Style
health
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

IT Systems Business Analyst - Watford - £28k + bonus + benefits

£24000 - £28000 per annum + bonus & benefits: Ashdown Group: IT Business Syste...

Trainee Recruitment Consultant - Birmingham - Real Staffing

£18000 - £23000 per annum + Commission: SThree: The SThree group is a world le...

Trainee Recruitment Consultant Birmingham

£18000 - £23000 per annum + Comission: SThree: The SThree group is a world lea...

Trainee Recruitment Consultants

£20000 - £25000 per annum + OTE £Competitive: SThree: SThree Group and have be...

Day In a Page

How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?

A crime that reveals London's dark heart

How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?
Meet 'Porridge' and 'Vampire': Chinese state TV is offering advice for citizens picking a Western moniker

Lost in translation: Western monikers

Chinese state TV is offering advice for citizens picking a Western moniker. Simon Usborne, who met a 'Porridge' and a 'Vampire' while in China, can see the problem
Handy hacks that make life easier: New book reveals how to rid your inbox of spam, protect your passwords and amplify your iPhone

Handy hacks that make life easier

New book reveals how to rid your email inbox of spam, protect your passwords and amplify your iPhone with a loo-roll
KidZania lets children try their hands at being a firefighter, doctor or factory worker for the day

KidZania: It's a small world

The new 'educational entertainment experience' in London's Shepherd's Bush will allow children to try out the jobs that are usually undertaken by adults, including firefighter, doctor or factory worker
Renée Zellweger's real crime has been to age in an industry that prizes women's youth over humanity

'Renée Zellweger's real crime was to age'

The actress's altered appearance raised eyebrows at Elle's Women in Hollywood awards on Monday
From Cinderella to The Jungle Book, Disney plans live-action remakes of animated classics

Disney plans live-action remakes of animated classics

From Cinderella to The Jungle Book, Patrick Grafton-Green wonders if they can ever recapture the old magic
Thousands of teenagers to visit battlefields of the First World War in new Government scheme

Pupils to visit First World War battlefields

A new Government scheme aims to bring the the horrors of the conflict to life over the next five years
The 10 best smartphone accessories

Make the most of your mobile: 10 best smartphone accessories

Try these add-ons for everything from secret charging to making sure you never lose your keys again
Mario Balotelli substituted at half-time against Real Madrid: Was this shirt swapping the real reason?

Liverpool v Real Madrid

Mario Balotelli substituted at half-time. Was shirt swapping the real reason?
West Indies tour of India: Hurricane set to sweep Windies into the shadows

Hurricane set to sweep Windies into the shadows

Decision to pull out of India tour leaves the WICB fighting for its existence with an off-field storm building
Indiana serial killer? Man arrested for murdering teenage prostitute confesses to six other murders - and police fear there could be many more

A new American serial killer?

Police fear man arrested for murder of teen prostitute could be responsible for killing spree dating back 20 years
Sweetie, the fake 10-year-old girl designed to catch online predators, claims her first scalp

Sting to trap paedophiles may not carry weight in UK courts

Computer image of ‘Sweetie’ represented entrapment, experts say
Fukushima nuclear crisis: Evacuees still stuck in cramped emergency housing three years on - and may never return home

Return to Fukushima – a land they will never call home again

Evacuees still stuck in cramped emergency housing three years on from nuclear disaster
Wildlife Photographer of the Year: Intimate image of resting lions claims top prize

Wildlife Photographer of the Year

Intimate image of resting lions claims top prize
Online petitions: Sign here to change the world

Want to change the world? Just sign here

The proliferation of online petitions allows us to register our protests at the touch of a button. But do they change anything?