Editor’s Note
This article discusses market speculation regarding a potential acquisition in the luxury sector. It is based on industry rumors and a single media report, and no official statements or confirmations have been made by the involved companies. Readers should treat the information as unverified.
The French luxury jewelry brand Cartier has once again caught the eye of capital, with the world’s largest luxury conglomerate, France’s LVMH Group, reportedly seeking to acquire it.
On February 21, the Swiss business newspaper Finanz und Wirtschaft reported that LVMH Group is interested in acquiring Swiss luxury group Richemont, with Cartier being the latter’s flagship jewelry and watch brand. The report cited recent “private rumors” within the fashion and luxury industry, suggesting LVMH is taking action regarding this potential acquisition.
The report stated that LVMH’s Chairman and CEO, Bernard Arnault, is determined to bring Cartier into the group’s Watches & Jewelry division to help strengthen and develop this business line.
Currently, LVMH Group owns several jewelry brands including Tiffany & Co., Bvlgari, Chaumet, and Fred. Notably, LVMH completed the acquisition of Tiffany for $16.2 billion in January 2021, expanding its footprint in the North American jewelry market.
Tiffany’s inclusion rapidly increased LVMH’s market share in the high-end jewelry segment. In the 2022 fiscal year, LVMH’s Watches & Jewelry division achieved revenue growth of 18% year-on-year to €10.581 billion, making it the group’s third-largest business segment after Fashion & Leather Goods and Selective Retailing. Operating profit for the Watches & Jewelry division grew by 20.1% after deducting selling and general administrative expenses.
LVMH specifically highlighted that Tiffany had a record-breaking year in 2022, with the brand’s popularity soaring. Bernard Arnault stated during the 2022 annual report meeting that if Tiffany were still a publicly traded company today, its market value would be double the price LVMH paid for it.
LVMH’s acquisitions in the jewelry sector have not slowed since. On November 25, 2022, LVMH announced the acquisition of Italian jewelry manufacturer Pedemonte Group. This manufacturer owns several fine jewelry workshops, primarily located in Northern Italy and Paris, France. Having previously collaborated with LVMH brands, the group stated this acquisition would benefit its Watches & Jewelry business, with its jewelry brands “significantly increasing productivity.”
Luxury companies acquire and integrate leading jewelry brands and their assets through capital operations to rapidly expand their market presence and quickly increase their scale in a specific field. Additionally, acquiring upstream suppliers helps the acquired brands boost production capacity to meet growing demand.
Simultaneously integrating both upstream and downstream enterprises reflects LVMH’s ambition in the entire high-end jewelry and watch sector: to build a complete and extensive supply chain for high-end jewelry manufacturing and sales, ultimately becoming the dominant player in this field.
Beyond frequent mergers and acquisitions in the high-end jewelry sector over the past two years, LVMH’s recent reorganization of its existing jewelry and watch resources further confirms this ambition.
In February 2023, LVMH announced the revival of the independent watchmaking brand DANIEL ROTH, which had faded from the market for years, under the guidance and management of Louis Vuitton’s La Fabrique Du Temps high-end watchmaking workshop. Master watchmakers Michel Navas and Enrico Barbasini will oversee DANIEL ROTH’s product development. The brand’s first new watches are expected to launch in the second half of 2023.
The DANIEL ROTH brand was acquired by Bvlgari (then a publicly traded company) in 2000, and its assets subsequently came under LVMH’s ownership along with Bvlgari. For over 20 years, the DANIEL ROTH brand’s development stagnated. Its current return to the market is attributed to LVMH’s strategic shift towards prioritizing high-end jewelry and watchmaking.
In fact, besides this brand, Louis Vuitton’s high jewelry and watches, Dior’s high jewelry, and the Gerald Genta brand, now developed as a product line under Bvlgari, have all received substantial resource support from the group for development over the past three years.
Therefore, from the perspective of LVMH’s current strategy, Bernard Arnault’s desire to acquire Cartier is not unfounded. His aggressive style in luxury acquisitions (dubbed “the wolf in cashmere”) lends more concrete imagination to the potential acquisition of Richemont. Realistically, Richemont, focused on high-end jewelry and professional watchmaking—especially its flagship brand Cartier—would significantly complement LVMH’s ambition to dominate the jewelry and watch market.
Cartier excels not only in jewelry but is also a leading brand in the watch market. According to a report by investment bank Morgan Stanley and Swiss consultancy LuxeConsult, Cartier Watches became the world’s second-largest watch brand by revenue in 2021 with CHF 2.39 billion, trailing only Rolex and ahead of OMEGA.
Acquiring Cartier would substantially increase LVMH’s market share in the high-end jewelry and watch sector. Moreover, Richemont’s portfolio of professional watchmaking brands, such as Vacheron Constantin, Jaeger-LeCoultre, and IWC, could theoretically strengthen LVMH’s relatively weaker professional watchmaking capabilities.
However, acquiring Richemont is no easy task. Over the past three years, Richemont’s founder and Chairman, Johann Rupert, has repeatedly stated he has no intention of selling the company. During the 2022 board elections, he firmly secured the founding family’s control over the company.
In fact, between 2020 and 2021, rumors circulated that another French luxury company, Kering (parent of Gucci), wanted to merge with Richemont. This rumor was considered credible largely because Kering, strong in fashion and accessories, and Richemont, strong in high jewelry and watches, could complement each other. In a challenging macroeconomic and volatile market environment, they could potentially counterbalance the almost monopolistic, counter-cyclical growth of LVMH.
Johann Rupert addressed this rumor during an earnings call in May 2021. While acknowledging that Kering had indeed expressed interest in “joining forces,” he emphasized he had no intention of selling the company.
The speculation about a Kering-Richemont alliance has since faded. Facing LVMH’s formidable competition, both Kering and Richemont, each with their own weaknesses, are evolving in their own ways to address potential crises.
In 2022, Kering officially abandoned its professional watchmaking business, marginalized its jewelry brands, and shifted its focus to developing its fashion brands Gucci and YSL, attempting to diversify its business for comprehensive development across fashion, beauty, high jewelry, and watches.
Richemont is selling its long-unprofitable e-commerce business, YNAP, to focus more on high-end jewelry and watches. Despite a sluggish Chinese market in 2022, Richemont maintained a 12% year-on-year sales growth at constant exchange rates for the nine months from April to December, remaining in a leading industry position.
LVMH’s current market capitalization is €390 billion, while Richemont’s is €74 billion—LVMH is over five times larger. However, the capital market reacted tepidly to this acquisition rumor. On the day of the news, LVMH’s stock price rose only 2.5%, while Richemont’s rose just 1%.
The primary obstacle to this “courtship” likely comes from Johann Rupert, who remains steadfast in maintaining the group’s independence. In 2022, the founder and Chairman displayed a tough stance, stating:
