Racamier

"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 1987, 45% of the company's sales were made in the Asia-Pacific region, with crazy margins. In Japan alone, the profits displayed reached a third of the turnover, which amounted to 9 billion francs! Louis Vuitton will also create stores in the United States and Europe. Racamier's strategy is clear: directly from producer to consumer. To make more money, Vuitton's CEO wants to combine the margins of the manufacturer, wholesaler, and retailer."

"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."

"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."

"The head of Louis Vuitton and the head of Financière Agache sign a six-point protocol to jointly take control of LVMH. The document exists in only two copies and has only four pages. Each term has been weighed. It states in the preamble that "given the project under way to introduce a foreign shareholder to a significant extent into the capital of LVMH, a project carrying a very great danger in the long term for the unity and integrity of the company, Messrs. Racamier and Oligastro have deemed it necessary, for the protection of the company and its shareholders, especially the Vuitton family, to approach the Arnault group... The intention of the two parties is to maintain the LVMH group's belonging to the typically French domain of high quality and prestige, as well as to protect it against the risks of dismantling2"

""We weren't even married for eight days when Racamier came to my office to tell me that we absolutely had to change the color of the letterhead, which wasn't brown enough for his taste," complained Alain Chevalier."

"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."

"Above all, a few days before the meeting, LVMH's stock has once again soared on the stock exchange. Who is buying? Racamier started it. Immediately, Arnault reacted by taking 10% of the capital. He brings out the big guns in the face of his rival's rifle. "It was an attack, it was entirely legitimate that we respond without delay," explained the CEO of Dior to justify this investment of 4.1 billion francs made in three days, without his partner Guinness being consulted, contrary to the terms of their agreement, which will provoke the anger of Anthony Tennant, forced to finance 40%. The Englishman is starting to think that young Arnault is exaggerating. But can he go so far as to endanger the global distribution agreement between the two groups? Not really. And the presence of Alain Chevalier helps to calm him down."

"The two men go up to the sixth floor to check the press releases that have been prepared. Arnault eliminates without hesitation the one that pays a strong tribute to the previous management in favor of the more sober one, which nevertheless briefly praises Alain Chevalier and Jean-Louis Masurel. Masurel? That's too much for Arnault, who crosses out the sentence with a stroke of a pen: it's not good to come from a prominent family in the north. Arnault hates Masurel, whom he has always perceived as condescending towards him. On the other hand, next to "Bernard Arnault, elected...", he adds: "unanimously". And it will take Racamier's communication services to insist that Arnault finally accept his title of vice-chairman of the executive board in the final press release."

"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.""

"He has listened to Racamier. He has "ears" everywhere. He is now informed, in real time, of what is going on. His informants have noticed a lot of comings and goings at the Moët-Hennessy headquarters on Avenue Hoche."

"Three days later, the Paris Commercial Court rules in his favor and grants the request: it appoints a judicial representative at Louis Vuitton, responsible for convening a general meeting to change the statutes. In his reasons, President Philippe Grandjean justifies himself with the massive argument already raised by Arnault and Godé: "It is not healthy to let the company be run by a team on probation and in disagreement with 98% of its shareholders." Racamier is not defeated. He immediately appeals."

"LVMH. Bernard Arnault is infuriated by this move. Seeing the head of a subsidiary (even if he is the second-largest shareholder of the group) act in this way is a transgression of all the rules of capitalism, compounded by a personal affront, on which he cannot compromise. The chairman of the LVMH management board will therefore initiate a legal process to remove Racamier from Louis Vuitton by calling for an immediate general meeting of the company. Intoxicated by victory and blinded by resentment, Bernard Arnault has not had the patience to wait a few months for the ordinary general meeting scheduled for June 1989, during which he could have easily dethroned the old man. Instead, his criminal proceedings will only delay the deadline! Arnault has indeed fallen into a trap. He has no other choice but to convene a general meeting to dissolve the management board he has just appointed, himself!"

"For the first time, LVMH is calling on Kroll Associates, an American research firm specializing in economic intelligence. The mission is to uncover Racamier's secrets. However, the results are not up to par, and time is running out."

""The elements gathered and observed on a group of 200 companies reveal, through the repetitive nature of certain operations, the existence of a highly developed system aimed at promoting the growth of the leader's financial and personal wealth [...] to the detriment of minority shareholders." The Gaudino firm continues: "The apprehended principle consists in disadvantaging companies listed on the stock exchange, both by making them bear heavy losses and by depriving them of significant capital gains, to the benefit of other companies in which the leader's interest percentages are the strongest. In this strategy, the total losses recorded would be between 8 and 10 billion francs." A serious accusation. However, it should be noted here that no minority shareholder of Bernard Arnault has ever had him convicted. There has not even been a single complaint from a minority shareholder between 1989 and today11. Not even from Racamier!"

"It is on the sixth floor of 70 Champs-Élysées that Racamier organizes his shadowy meetings. When he agrees to receive or speak to a few privileged individuals, he brings them to the luxurious Vuitton decor of his hideout. It reflects perfectly the Vuitton philosophy: a few trunks, travel photos, fawn tones, a leather smell, and of course, a glass of Veuve Clicquot for the guests and a glass of Tio Pépé for the host. In this outdated setting, he tells the story of Louis Vuitton and explains his concern to make it a distinct brand: "The alchemy was not easy to achieve. We often tend to go for the easiest option. If we had not held the bar firmly, Louis Vuitton would have become a larger Lancel." He justifies himself: "The merger was intended to balance the risks. The strategy had already begun with the acquisition of Veuve Clicquot. But the graft with Moët did not take.""