Outlook: A tale of two billionaires

On the change in Pearson's strategic thinking, the passing of Christie's into french hands, and the oft's latest look at the petrol market;
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The Independent Online
ON THE day that Pearson acquired Simon & Schuster, one of the great names in US publishing, it hardly seems fair to complain about a Frenchman buying Christie's International. Nonetheless, there does seem to be quite a number of famous British trading names passing into foreign hands right now. Our other great auction house, Sotheby's, is already American owned. The Savoy has gone west too. Rolls-Royce Motors is about to fall to the Germans. Why are there no British billionaires or buyout funds that want to own these splendid international brand names?

Well actually there was in the case of Christie's. As one of his last salvos into the world of British corporate finance before moving off to New York, Brian Keelan of SBC Warburg put together a consortium of Joe Lewis and a number of other wealthy financiers. They spent months trying to convince Christopher Davidge and the rest of the Christie's board to agree a bid around the pounds 3 a share level. Mr Lewis's main line of business these days is wheeler dealing in stocks and shares, foreign exchange, commodities, and derivatives. In essence, he operates a one man hedge fund out of the Bahamas, and hugely successful he's been at it too. He did not get as rich as he is by overpaying.

Mr Lewis's 29 per cent stake in Christie's was one of those investments which uncharacteristically for him, appeared to be going nowhere. Mr Lewis's logic was that even if he failed to take the company into private ownership himself, someone else would fall out of woodwork prepared to give him a decent premium.

So by galvanising the situation, Mr Lewis has done everyone a service. Along came Francois Pinault, who as well as being a keen collector of paintings and sculpture, seems to collect trophy assets with equal vigour. His privately owned Artemis holding company already lays claim to Chateau- Latour and the Vail ski resort in the American Rockies. Mr Lewis managed to extract what can only be described as an extremely fancy price from Mr Pinault, which he is now, in bidding for the rest of the shares, obliged to offer to other investors too.

The two billionaires make a striking contrast in their investment approach. Mr Lewis has the archetypal street trader's mentality - in and out fast making a tidy profit on the way. To Mr Lewis, always looking for short term value, Mr Pinault must seem to have more money than sense. But let's not be too hasty in our judgement. Mr Pinault's is the classic Gallic, long-term approach to brand value and management. To him, brands have intrinsic value, extracted over decades or even hundreds of years. It is the same sort of mentality which saw Bernard Arnault of LVMH bid an astonishing 200 times earnings for Chateau `Yquem.

Christie's should thrive under his ownership. Removed from the need to deliver a constantly rising income stream to dividend hungry stock market investors, Christie's will be able to move into the art market big time, securing the big sales by underwriting their value and carrying highly priced stock through the art market's frequent downturns. OK, so Mr Pinault is French. So what. That probably makes him the best possible home for this fine old company.

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