News Talks and Rumors Circulating About LVMH Group's Potential Acquisition of Richemont's Watch Division

If we were to discuss scenarios like Mercedes acquiring BMW or Boeing take over Airbus, it would undoubtedly be a major surprise. However, when these rumors revolve around the two largest groups in the watch industry, it becomes something that enthusiasts find hard to believe. For years, speculations have circulated about LVMH or the Kering group contemplating the acquisition of Richemont, a company with an estimated turnover of around 20 billion euros in 2023. This is where it gets even crazier for us watch lovers. In an industry that always brings us surprises. This will be a milestone in the history of watchmaking.

Sales of the Richemont Group, as revealed on its website.

The genesis of these rumors can be traced back to a February 2023 report by the Swiss newspaper Finanz und Wirtschaft, citing information from "whispers behind closed doors." The Financial Times has recently revived these old rumors, suggesting a potential attempt by either LVMH or Kering to acquire the Swiss luxury group Richemont. The focus, particularly on Cartier, is evident, given Morgan Stanley's estimation that it contributes around 10 billion euros, or half of the group's annual sales. Despite acknowledging past cooperation proposals from rival Kering, Richemont's President Johann Rupert has unequivocally stated that he has no intention of selling the luxury goods company under his control.

The ongoing speculation centers around a possible merger that could combine Kering's fashion strength, notably with its influential Gucci brand, and Richemont's dominance in jewelry through Cartier and Van Cleef & Arpels. Such a union could create a formidable force to compete with industry leader LVMH, whose market capitalization already surpasses Kering's threefold. The feasibility of any deal hinges on Rupert's willingness to sell or merge the company he founded in 1988 and expanded significantly through acquisitions. While the 70-year-old South African businessman owns a 9 percent equity stake, his control over the company's future is secured through voting and decision-making rights granted by the board of directors.

Recent rumors strongly favor LVMH, indicating a desire to acquire Richemont's watch division and strengthen its watchmaking portfolio by integrating renowned brands such as Vacheron Constantin, Panerai, Jaeger-LeCoultre, and IWC under its umbrella.

Just last week, LVMH made a significant announcement, introducing Frédéric Arnault as the new CEO of the LVMH Group's Watch Division. This means that the CEOs of Tag Heuer, Zenith, and Hublot will now report to him. Over the past two decades, LVMH's strategic moves have shown a clear intention to bolster its position in the luxury watch sector and potentially become the global market leader. This transformation began in 2011 with the acquisition of La Fabrique de Temps, a movement manufacturer, pushing Louis Vuitton's watch division to new heights.

Arnault's family, The largest shareholder of the LVMH Group

While Richemont owner Johann Rupert has not explicitly chosen a successor, the Arnault family, holding around 48 percent of LVMH shares, has a more defined succession plan. Bernard Arnault has strategically integrated all five of his children into the company, with Delphine Arnault leading Dior, Antoine Arnault overseeing LVMH communications and chairing Berluti and Loro Piana, and Alexandre Arnault serving as Executive Vice President of Tiffany & Co. Jean Arnault takes on the role of CEO of the Louis Vuitton Watches Department, marking a successful renaissance for the brand in the past year. Additionally, LVMH's acquisition of the rights to Gerald Genta and Daniel Roth's company is gradually being revived by Jean Arnault under the guidance of Navas and Barbacini.

Despite ongoing speculations about a potential acquisition, LVMH has not officially presented any offer for Richemont. Although a merger of this scale could establish a prominent force in the luxury sector, the evaluation of whether the advantages outweigh the complexities and risks of such a transaction is still pending. The future will reveal whether LVMH will continue on this course or explore alternative avenues for expansion.