【France / Swi】Why LVMH Could Buy Back the Swiss Luxury Giant Richemont (Cartier)

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Editor’s Note

This article discusses market speculation about a potential acquisition of Swiss luxury group Richemont by LVMH. It is based on unconfirmed rumors and should be read as an exploration of a hypothetical scenario, not a report of a confirmed transaction.

LVMH, Kering, Richemont... que possèdent les fleurons du luxe ?
Market Rumors Suggest a Potential Mega-Deal

Following its spectacular acquisition of Tiffany, LVMH could pursue further takeovers. In this regard, according to market rumors, the Swiss luxury giant Richemont (owner of the Cartier brand) constitutes a potential (and sizable!) target.

How Far Will LVMH Go?

The world’s number one luxury group, already valued at over €400 billion on the stock market, has experienced extraordinary growth in recent decades through organic expansion and a series of acquisitions, including the major one of American jeweler Tiffany. According to market rumors, LVMH may not stop there. The giant founded by Bernard Arnault could potentially take control of its Swiss competitor Richemont, renowned in jewelry and watchmaking (notably the Cartier brand).
LVMH and Richemont have portfolios filled with prestigious, international brands. This merger would allow LVMH to “strengthen its market share in watchmaking and jewelry,” argues Financière Galilée, interviewed by Capital.

“This merger could offer potential synergies, with increased market share and economies of scale. LVMH would maintain an even more attractive image in the eyes of investors, especially if it acquires a luxury leader,” argues the asset management company.
Bernard Arnault, fondateur de LVMH
Significantly Expanding the Brand Portfolio
“While France dominates the luxury market (thanks to its many brands like Louis Vuitton, Chanel, Hermès…), with this merger, the empire founded by Bernard Arnault could expand its brand portfolio, which already numbers no less than 75 (including Tag Heuer, Hublot, Zenith, Chaumet, Bulgari…),” highlights Financière Galilée.
Competition Issues… But Not Insurmountable?

Richemont, led by Jérôme Lambert, is considered a watchmaking icon. It is the world’s third-largest luxury company by market capitalization (€80 billion) and number four by revenue, while LVMH is the leader in the luxury market and number one in terms of market capitalization.
LVMH had already acquired an American company specializing in jewelry, Tiffany, in 2020.

“If the LVMH – Richemont merger were to happen, the French giant would significantly increase its revenue in the watch & jewelry segment since about a dozen additional brands would be added to its list. This segment represented 13.4% of LVMH’s revenue in 2022. For Richemont, jewelry represented 43.5% of revenue, and watchmaking represented 31.6% of revenue in 2022,” notes Financière Galilée.
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LVMH is itself best known for its leather goods, with its flagship brand Louis Vuitton, one of the most valuable in the world. In case of issues with competition authorities, LVMH could always have the option to divest certain brands if necessary…

“With this acquisition, LVMH would have a much larger, even dominant position in Asian, American, and European markets. Bernard Arnault would consolidate his leadership position in the markets, while he already owns the world’s number one company in the luxury sector,” emphasizes the asset management company.

Despite market panic following the failures of Silicon Valley Bank, Signature Bank, Silvergate Bank and concerns about Credit Suisse, LVMH currently has the largest market capitalization in Europe across all sectors, while Richemont represents, as seen, about €80 billion in market capitalization.

The Next Target: Swatch Group?

If the merger between LVMH and Richemont materializes, could the next acquisition be the Swiss company Swatch Group?
Given Bernard Arnault’s strong attraction to the “watch & jewelry” segment, such a scenario is entirely conceivable, according to Financière Galilée.

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“After acquiring Tiffany & Co in 2020, he would set his sights a second time on a company specializing in jewelry and watchmaking,” it argues. A story to follow…
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⏰ Published on: March 25, 2023