Gucci

"Here are two entrepreneurs who are also heirs; who have tremendously developed what they inherited, even though Férinel's real estate was in much better condition than Bolloré's papers; who each identified a sleeping beauty (Dior, within the Boussac empire, for Arnault, and Rivaud bank for Bolloré); who followed the advice of the same godfather in the Parisian establishment-Antoine Bernheim-to finance their rise to power; who ensured the construction of their empire through a very unusual blend of entrepreneurial aggression and ability to leverage new financial market instruments; who experienced both failures and windfalls (Gucci for Arnault and Bouygues for Bolloré); who moved into the new century without forgetting how to wield hostility (Hermès and Havas learned this to their detriment); who practiced financial engineering with incredible dexterity-Arnault increased his share of LVMH's capital from 38% to 46% in one day, crushing the Christian Dior holding, while Bolloré reached 27% in Vivendi, thanks in large part to the billions inherited from the opportune merger of the communication group with Havas; and who, finally, share the same dynastic ambition, a fierce determination to firmly establish this resolutely familial choice over time. In fact, it is the defense of family capitalism that is the cause of their joint presence in Lagardère's capital, and the potential source of a collision..."

"At the same time, the executives of Kroll Associates in France, an American economic intelligence company engaged by LVMH for several weeks to find any exploitable weaknesses in both Gucci and De Sole and Ford, fax the news highlights to their European management in the UK, without hiding their surprise: "We are speechless," they write. The intelligence agency wasn't informed..."

"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!"

"In mid-February 1999, Pierre Godé and James Lieber, the group's attorney for sensitive affairs, met with Nicolas Waldmann in Paris, accompanied by Thomas Helsby, the head of Kroll Associates' London office. The objective of the meeting was to launch an investigation into Gucci as well as its two main leaders, Domenico De Sole and Tom Ford. A letter from Kroll, addressed to the leaders of LVMH, dated February 16th, was clear: "Your group currently holds a significant stake in a foreign company," Nicolas Waldmann wrote to Pierre Godé."

"A foundation was created by Gucci for the occasion, for the benefit of its employees. This foundation bought the shares on their behalf, using money borrowed from... Gucci. However, although these new shares are theoretically reserved for employees, they will never actually see them. Because they are non-transferable and will never be converted into individual shares. It's a temporary protection. At the end of the operation, Gucci plans to destroy these shares that it has created and financed itself, and only pay a flat premium to employees, which can reach a maximum of $ 13 million in total. De Sole and Ford are ecstatic: "We have the support of employees, suppliers, and independent shareholders," De Sole proclaims. Ford is not far behind: "I give my unconditional support to the measures taken by the board to safeguard our independence.""

"But most importantly, on that same day, Domenico De Sole pulled an incredible rabbit out of his hat. Gucci announced the immediate issuance of 20 million new shares, exclusively reserved for employees, which reduced LVMH's stake from 34.4% to 25.6%! Called ESOP (Employee Stock Ownership Plan), this "employee share ownership plan" is a diabolical invention that uses the inexhaustible resources of Dutch corporate law to prevent LVMH from imposing its views without taking majority control of Gucci. Michel Zaoui, head of mergers and acquisitions in Europe for Morgan Stanley (the advisory bank for Guinness against Bernard Arnault), came up with the idea."

"While François Pinault's offices on Boulevard de La Tour-Maubourg (in the former LVMH headquarters) have become a hive of activity, while Kroll is supposed to be monitoring Ford and De Sole like a shadow and reporting everything that is happening at Gucci, Bernard Arnault, for once, knows nothing, is not informed about anything, and has no suspicions. On March 18, he participates in a meeting with financial analysts, during which he reaffirms that he has no intention of launching a takeover bid for the entire capital of Gucci and is completely optimistic about the outcome of his operation."

"Time is running out. Domenico De Sole and Michel Zaoui from Morgan Stanley know how fragile the more or less fictitious allocation of shares to employees is, which reduces LVMH's stake in Gucci from 34.4% to 25.6%."

""I like to build," says De Sole. "Me too," replies Pinault, who suggests transforming Gucci into a multi-brand luxury company, like LVMH. The two men shake hands. The deal is sealed, although there are still many things to be settled, in terms of price and legal protection of the independence promised to Gucci."

"The sale of Saint Laurent to Gucci will prove to be much more complicated than expected. To finalize the deal, François Pinault will have to separate Saint Laurent (ready-to-wear and accessories), sold to Gucci, from Saint Laurent Couture, which will be bought by his personal holding company, Artémis. The prestigious haute couture house will remain under the control of Yves Saint Laurent and his partner Pierre Bergé. After paying them 78 million euros to acquire all the rights to the brand, he guarantees them millions of euros in royalties on Saint Laurent perfume sales until... 2016! In addition, François Pinault commits to financing the deficits of the couture house until 2006, which amounts to 36.6 million euros in six payments, until 2006. This is how Yves Saint Laurent and Pierre Bergé will have sold their name for the second time: already, in 1993, when Saint Laurent was bought by Sanofi, they had received 300 million francs as compensation for renouncing their status as a limited partnership company. Finally, Pinault will close the door on the famous but expensive fashion house."

"Measured reaction. In reality, Bernard Arnault, as usual, showed opportunism. A few months or years earlier, an initiative of this nature against a major international bank would have caused a scandal and disqualified its author. But the debate is raging in the United States, traumatized by the fall of the stock market, about the role of financial analysts, accused of very rarely going against the global interests of the banks that employ them. Is a takeover possible? Bernard Arnault is the first to attempt it in Europe, at the risk of alienating the community of analysts. This attack also has a signaling value. It indicates to the financial community, but also to journalists-and perhaps to ourselves-that he will not let any criticism, judgment, or negative assessment of his management or strategy, not to mention his person, go unanswered. Beyond that, this intimidation operation shows that Bernard Arnault remains sensitive when it comes to Gucci. And that, as soon as his interests are at stake, he has not lost any of his determination."

""Vuitton has developed extraordinarily. It is a more successful brand than Gucci, and the Sephora retail chain is doing very well. However, Donna Karan (DKNY) has not been a good acquisition," laments the advisor in the shadows. Sometimes, he also regrets that the LVMH boss does not involve his executives more in the profits.""

"H&M begins to hire so-called supermodels, exclusive photo models with the same aura as movie stars. And with equally high fees. Instead of Prada, Gucci, and Louis Vuitton, these women will now showcase H&M's low-cost fashion. And it will be light clothing for Christmas."

"The yellow taxis resemble a lava stream flowing south along the one-way Fifth Avenue in New York. On the sidewalks, businessmen in Armani suits walk with a paper cup of coffee in one hand and a mobile phone in the other. This parade street is the address for some of Manhattan's biggest tourist attractions: Rockefeller Center and the circular architectural museum Guggenheim. At the corner of Fifth Avenue and 51st Street on the Upper West Side, H&M's team has finally found the perfect spot. On 3,000 square meters of retail space across three levels, New Yorkers will be offered departments for men, women, youth, and cosmetics. Large glass windows form an enticing front facing the street. It is not possible to find many more expensive retail addresses anywhere in the world. Right next door, the luxury brand Gucci has its store. Stefan Persson says in a radio interview that low-price H&M still becomes a good neighbor."

""I believe Gucci is needed, but I think we are needed too. We can make sure that everyone can afford to buy the latest fashion." [85](private://read/01jas9tvg84jycb27616w1f9k8/#note-85)"

"Together with the head of her family office, she hosts a video conference with a small circle of managers and investors who gather whenever concrete superlatives beckon. The most important, René Benko, is connected from Austria. He wants to convince Alannah of himself and his business partner Tos Chirathivat, who has sent a representative. With a member of one of the economically most powerful family clans in Thailand, he already manages several luxury department stores like KaDeWe in Berlin or Alsterhaus in Hamburg: huge cathedrals for brand believers whose religions are named Gucci, Prada, or Saint Laurent. Although he is not the bidder with the highest offer, Benko tells Ms. Weston, but he is the one with the best intentions. His strategy: best owner instead of best bidder."