War waged with Gucci handbags

John Lichfield on a French fight for the Italian fashion house

The wood-cutter's son has rounded on the big, bad wolf. Little Red Riding Hood, clad from head to toe in Gucci, had better watch her step, however. The wood-cutter in question may be posing as her saviour, but he is no mean wolf himself.

Francois Pinault, the son of a Breton log merchant, and Bernard Arnault, scion of the Parisian politico-bureaucratic-business establishment, are the fiercest and biggest beasts in the French corporate jungle.

Until Friday morning, their paths had crossed only once and relatively amicably. Now they are going head-to-head, and claw-to-claw, over the ownership of Gucci, the Italian luxury-goods company.

The issue is not simply control of Gucci. In a double swoop on Friday, Mr Pinault made it clear that he intends to challenge the Louis Vuitton- Moet Hennessy (LVMH) group of Mr Arnault on its own territory: the international market for luxury goods.

Mr Arnault had been stalking Gucci for months. On Friday, Mr Pinault's PPR group seized 40 per cent of Gucci for pounds 1.7bn, in the form of an expansion of equity which instantly reduced Mr Arnault's painstakingly acquired share of the upmarket handbag, clothes and shoemaker to 18 per cent (from around 25 per cent). Simultaneously, Mr Pinault's family holding company paid pounds 600m for another long-time Arnault target, the beauty and luxury wing of the Sanofi group - owner of labels such as Yves Saint Laurent, Van Cleef and Arpels and Roger et Gallet.

The intention is to merge the two companies and create a new luxury goods giant which will prove a "pole of attraction" to other smaller, luxury companies and challenge the dominance of LVMH. Mr Pinault promises that Gucci will retain the commercial and artistic autonomy that it would have surrendered if it had been purchased by LVMH. The Breton has a reputation for allowing considerable freedom to his companies - so long as they are successful.

Mr Arnault, 50, son of a wealthy business family, graduate of the best schools and elite colleges, has not given up. "Mr Pinault's triumph will last for only a few hours," he is reported to have growled to his associates. He announced a hostile bid for 100 per cent of Gucci at an undisclosed price somewhere above the $75 (pounds 45) a share paid by Mr Pinault's PPR. Mr Arnault is also challenging the Pinault-Gucci deal in the Dutch courts (although an Italian company, Gucci is listed on the Amsterdam stock exchange). Mr Arnault argues that the deal is unjust because it hands Mr Pinault control of Gucci without giving existing shareholders a penny. The battle is likely to be long and hard.

Things are not supposed to happen this way in France. Hostile takeovers do occur, but cosy arrangements and understandings are more common. Or they used to be. Twelve days ago, the second largest French bank, BNP, made a hostile bid for two of its competitors at once (Societe Generale and Paribas). Now the two most successful and ruthless French businessmen of their generation are slugging it out with Gucci handbags. Something is stirring in the French business forest - Anglo-saxon attitudes are beginning to prevail.

The rise of Francois Pinault, who started with a pounds 10,000 loan in 1962, is in many ways an un-French story. The route to business riches in France is usually through the elite educational establishments and the upper echelons of the civil service. Mr Pinault left school without taking his baccalaureate. He is now possibly the wealthiest man in France with a fortune of pounds 3.5bn, which includes the Printemps and FNAC stores, Christie's auction house, part of TF1 (the biggest French TV company) and the Chateau Latour vineyards.

Mr Pinault told his official biographer that he quit school early because he was teased by richer students for his peasant accent. After his military service, he started a wood-trading company and discovered a short-cut to rapid expansion. He haunted bankruptcy courts and picked up failing businesses, which he asset stripped or turned around. For the rescue of one wood company in the Correze in south western France, he earned the gratitude and the friendship of the local MP, Jacques Chirac.

What drives Mr Pinault? One of his associates, the writer and political fixer, Alain Minc, says he is a "business poet", moved by the beauty of an elegant deal. Others suggest that he has never forgotten the humiliations of his childhood.

There is another pattern in Mr Pinault's dealings which the Gucci top brass might do well to study. On several occasions, he has been invited to intervene as a white knight - as now - by managements fighting off hostile bids. Within months or years, he has dumped the management and installed his own teams. The question remains. Is Mr Pinault the wood- cutter or the wolf?

Kenny Ireland, pictured in 2010.
peopleActor, from House of Cards and Benidorm, was 68
A scene from the video shows students mock rioting
newsSchool leaver's pic YouTube video features staging of a playground gun massacre
A family sit and enjoy a quiet train journey
voicesForcing us to overhear dull phone conversations is an offensive act, says Simon Kelner
Arts and Entertainment
The cast of The Big Bang Theory in a still from the show
tvBig Bang Theory filming delayed by contract dispute over actors' pay
England celebrate a wicket for Moeen Ali
sportMoeen Ali stars with five wickets as Cook's men level India series
Morrissey pictured in 2013
Life and Style
The director of Wall-E Andrew Stanton with Angus MacLane's Lego model
gadgetsDesign made in Pixar animator’s spare time could get retail release
peopleGuitarist, who played with Aerosmith, Lou Reed and Alice Cooper among others, was 71
Robyn Lawley
ebookA unique anthology of reporting and analysis of a crucial period of history
i100  ... he was into holy war way before it was on trend
Arts and Entertainment
High-flyer: Chris Pratt in 'Guardians of the Galaxy'
filmThe film is surprisingly witty, but could do with taking itself more seriously, says Geoffrey Macnab
Life and Style
food + drinkVegetarians enjoy food as much as anyone else, writes Susan Elkin
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

1st Line Support Technician / Application Support

£20000 - £24000 per annum: Harrington Starr: A leading provider of web based m...

Team Secretary - (Client Development/Sales Team) - Wimbledon

£28000 - £32000 per annum: Ashdown Group: Secretary (Sales Team Support) - Mat...

Accountant / Assistant Management Accountant

Competitive (DOE): Guru Careers: We are looking for an Assistant Management Ac...

Senior Investment Accounting Change Manager

£600 - £700 per day + competitive: Orgtel: Senior Investment Accounting Change...

Day In a Page

Save the tiger: Tiger, tiger burning less brightly as numbers plummet

Tiger, tiger burning less brightly

When William Blake wrote his famous poem there were probably more than 100,000 tigers in the wild. These days they probably number around 3,200
A tale of two presidents: George W Bush downs his paintbrush to pen father’s life story

A tale of two presidents

George W Bush downs his paintbrush to pen father’s life story
Save the tiger: The day America’s love of backyard tigers led to a horrific bloodbath

The day America’s love of backyard tigers led to a horrific bloodbath

With only six per cent of the US population of these amazing big cats held in zoos, the Zanesville incident in 2011 was inevitable
Samuel Beckett's biographer reveals secrets of the writer's time as a French Resistance spy

How Samuel Beckett became a French Resistance spy

As this year's Samuel Beckett festival opens in Enniskillen, James Knowlson, recalls how the Irish writer risked his life for liberty and narrowly escaped capture by the Gestapo
We will remember them: relatives still honour those who fought in the Great War

We will remember them

Relatives still honour those who fought in the Great War
Star Wars Episode VII is being shot on film - and now Kodak is launching a last-ditch bid to keep celluloid alive

Kodak's last-ditch bid to keep celluloid alive

Director J J Abrams and a few digital refuseniks shoot movies on film. Simon Usborne wonders what the fuss is about
Once stilted and melodramatic, Hollywood is giving acting in video games a makeover

Acting in video games gets a makeover

David Crookes meets two of the genre's most popular voices
Could our smartphones soon be diagnosing diseases via Health Kit and Google Fit?

Could smartphones soon be diagnosing diseases?

Health Kit and Google Fit have been described as "the beginning of a health revolution"
Ryanair has turned on the 'charm offensive' but can we learn to love the cut-price carrier again?

Can we learn to love Ryanair again?

Four recent travellers give their verdicts on the carrier's improved customer service
Billionaire founder of Spanx launches range of jeans that offers

Spanx launches range of jeans

The jeans come in two styles, multiple cuts and three washes and will go on sale in the UK in October
10 best over-ear headphones

Aural pleasure: 10 best over-ear headphones

Listen to your favourite tracks with this selection, offering everything from lambskin earmuffs to stainless steel
Commonwealth Games 2014: David Millar ready to serve up gold for his beloved Scotland in the end

Commonwealth Games

David Millar ready to serve up gold for his beloved Scotland in the end
UCI Mountain Bike World Cup 2014: Downhill all the way to the top for the Atherton siblings

UCI Mountain Bike World Cup

Downhill all the way to the top for the Atherton siblings
Save the tiger: The animals bred for bones on China’s tiger farms

The animals bred for bones on China’s tiger farms

The big cats kept in captivity to perform for paying audiences and then, when dead, their bodies used to fortify wine
A former custard factory, a Midlands bog and a Leeds cemetery all included in top 50 hidden spots in the UK

A former custard factory, a Midlands bog and a Leeds cemetery

Introducing the top 50 hidden spots in Britain