Chevalier

"It is better to deal with God than with his saints. The Moët-Hennessy clan reacts like Chevalier: since Racamier opened the door to Arnault, they might as well deal directly with him! A royal path thus opens up before the boss of Financière Agache. Especially since David Dautresme recovers 12% of the capital of LVMH, just by making a few phone calls. These securities are, in fact, in the hands of the six investors to whom the OBSA issued by Moët-Hennessy in 1987 had been placed. Since then, these securities have discreetly remained parked in these six parking lots: UAP, Caisse des dépôts, Crédit agricole, Worms Bank, BNP and... Lazard, lead manager of the operation. Dautresme is thus negotiating with these establishments the conditions for the sale of these OBSA to Bernard Arnault. But the sellers must not appear, as it was stipulated that these securities had to be placed in the general public. Also, once the terms of the transaction are agreed upon, they will be invited to go through a discreet Belgian-Luxembourg intermediary, Belmavobel International Securities."

"Lévêque knows that he will soon be ousted by the returning Socialists. Eager to make a big splash before his departure, he has decided to sponsor the secret alliance between Arnault and Racamier by opening up a first credit line of 2 billion francs to his protégé. He will be able to mobilize more than 5 billion to take 20% of LVMH. In reality, Crédit Lyonnais is offering Bernard Arnault an almost unlimited right of withdrawal that day. Arnault therefore continues his purchases on the stock market, which has the consequence of alarming Chevalier, who still doesn't know where the attack is coming from. On May 31, 100,000 LVMH shares are traded, 98,000 on June 1, 169,000 on June 2, compared to 25,000 under normal circumstances. The group is dancing on a volcano."

"In the vineyards of Champagne and Charentes, there is relief. For several months, people there had been living in fear of a takeover bid for Moët-Hennessy. A choice target with its collection of great brands, including the top champagne, Moët-et-Chandon (30 million bottles), one of the two great cognacs, Hennessy (46 million bottles), a prestigious perfume, Dior, and renowned beauty products, such as Roc. But what neither the families nor Chevalier nor Racamier realized is that size is no longer, in itself, a defense against a takeover bid."

"All of these companies were controlled by families who were protective of their independence. Chevalier was able to convince them to lose their majority while keeping their identity, with the promise of increased dividends."

"On both sides, grievances accumulate. Racamier's explanation: "The people at Moët-Hennessy experienced the merger as an absorption of Louis Vuitton and not as what it really was, namely an association." Chevalier's version: "Racamier is a difficult man who wants to control everything down to the smallest detail; you can't run a business with him." The disillusionment is great for Chevalier, who thought he could put the Vuitton family in his pocket as he had previously done with Moët, Chandon, Hennessy, and others Mercier."

"To achieve his goals, however, he made a major concession to Henry Racamier: LVMH would be led by an executive board and a supervisory board, a more collegiate organization that, for Racamier, would bring more autonomy to the various components of the group. Chevalier cannot oppose this new organization, desired by his shareholders, but he does not appreciate it. He senses that these two capitalists will constrain him, the salaried manager, to execute their choices. For the first time since he became president of Moët-Hennessy in 1982, he discovers that he has shareholders."

"The Jacques Rober construction is admirably crafted. It gives Arnault, in his offensive, the financial support of the powerful Guinness battalions, while leaving him in control as the majority shareholder. How could the English brewer accept to be so bound and tied? He wanted at all costs to participate in LVMH's capital to consolidate his global distribution agreement in wines and spirits signed in 1987, which brought him a quarter of his profits, or more than 1 billion francs. Anthony Tennant, the head of Guinness, was convinced that he had no chance of succeeding alone in making a strong entry into LVMH due to the nationalist reactions of the French public and authorities, for whom the luxury group is part of the national heritage. With Chevalier's endorsement, Arnault would have argued that he had the support of the public authorities and that the most effective way to enter LVMH was to partner with him. This was confirmed by his own advisory bank, which was none other than... Lazard Brothers in London."

"them. Thus, through his initiatives, Henry Racamier has created a united front against him. Which Bernard Arnault skillfully takes advantage of to win the game. Because everyone, now, owes him: Chevalier, whose situation he preserves, Moët and Hennessy, whom he saves from marginalization, Guinness, whom he allows to take a significant, albeit indirect, stake in the capital of LVMH. Even Racamier himself, who still believes that their interests, those of luxury, will eventually converge against the camp of wines and spirits. He still sees himself as the indispensable main shareholder."

"On October 28, the Paris Stock Exchange literally collapses: faced with the massive influx of sell orders at any price, more than half of the 180 main stocks cannot be listed. The LVMH stock is particularly affected. It loses 40% of its value and falls to 1,200 francs, which brings the value of the group to 13 billion francs (2 billion euros). For Racamier and Chevalier, everything has to be redone. The bubble has burst. At current prices, LVMH becomes a target again. Everything is possible once more."

"Six months were enough. Bernard Arnault had won. Better still: he had closed the door behind him. Because of his hussar-style offensive, the Stock Exchange Operations Commission would now require any buyer of more than 33% of a listed company's shares to launch a takeover bid for at least 66% of the capital, to protect the interests of minority shareholders. No one would be able to conquer a company the value of LVMH without paying the price. Door closed behind him? In France, yes, but not everywhere. Because this regulation does not exist in the Netherlands. This would allow François Pinault, ten years later, to do the same thing to Arnault with Gucci as Arnault had done to Racamier and Chevalier!"

"Racamier against Chevalier: "We can buy brands but without paying too much." And to dispel any ambiguity, he confides: "I don't need the presidency to make my voice heard. It's the major shareholder who decides if a dispute arises within the group.""

""Whatever happens, Bernard, you must know the esteem I have for you," he declares from the outset. "I am delighted, it is entirely mutual, but if you permit me, what is going to happen?" "We are at an impasse, as you can see as well as I can. Our interest, and yours in particular, is to accept the plan proposed by Henry Racamier. It is the only way to come out of this with our heads held high and without damage to the Paris market." "You know that this is a dismantling plan. The Paris market, as you say, would not understand breaking one of its most beautiful jewels to settle personal issues between people who cannot agree after deciding to merge their companies. For my part, it is out of the question for me to be part of such a scheme." "In these circumstances, what must happen will happen," concludes Chevalier, sententious and enigmatic.""

"When Henry Racamier introduced Bernard Arnault to the representatives of Moët and Hennessy on June 30th, he was obviously unaware of the negotiations between the president of Dior and Chevalier and Guinness. The families were also unaware. The president of Vuitton presented his takeover project which angered the families. They saw it as a betrayal from within, when they had feared an outside raider. They would never forgive him for this and asked Henry Racamier to leave the room. Frédéric Chandon de Briailles and Alain de Pracomtal then drew Bernard Arnault's attention to the dangers of a takeover: "Not only can another group attack us, but our best collaborators may leave us," they told him. Arnault acknowledged the argument. Alain de Pracomtal continued: "Would you see any inconvenience in associating with Guinness, with whom the group has committed itself?" Bernard Arnault was too happy to answer no. In exchange for this agreement that suited him, he asked for a right of first refusal on the shares of the Moët and Hennessy families, that is, on 13% of the capital. And he obtained it. The agreement will be signed at Lazard at the end of July. It does not have the unanimity of the approximately 200 members of the families. About fifteen young "reformers", especially among the Hennessys, think they are being forced. In any case, from now on, they are all linked: if they want to sell their shares, they are required to offer them first to Bernard Arnault. His strategy is starting to pay off. Bernard Arnault has managed to rally everyone to his side in... less than a week. First Racamier, who still relies on him to oust Chevalier. Then Chevalier, who is convinced he has found the necessary support in him to neutralize Racamier. Just like the families, who are now condemned to play with him. Finally Guinness, who has obtained a seat at LVMH thanks to him. A clever move. Everyone thinks they owe him something. No one yet suspects the young man's true intentions. "They will not be able to compromise my plans," he must speculate. He knows he has only strengths in his hand."

"One can well imagine their first conversation on the phone, one morning in early May: “Would you be interested in a stake in LVMH, Henry Racamier must have said, somewhat condescendingly.” “It would be a great honor, Bernard Arnault certainly replied in the tone of the greatest deference.” When the young boss of Dior hangs up, his smile is carnivorous. "I won," he probably thinks, before inviting his top executives to lunch. Bernard Arnault does not warn Antoine Bernheim. It is still premature. Lazard is already engaged with Chevalier. So he turns to Crédit Lyonnais for the occasion. A first meeting is scheduled with Henry Racamier's banker at the Dior headquarters."