For LVMH, it’s a gem of a deal
Luxury giant buys jeweler Bulgari
PARIS — French fashion colossus LVMH Moet Hennessy Louis Vuitton is adding another jewel to its crown: Italy’s Bulgari.
The unexpected tie-up generated new buzz during an already frenzied Paris Fashion Week. And it puts LVMH, run by France’s richest man, in an even better position to woo nouveau riche consumers in countries like China and Russia who are clambering for old-world status markers, like Louis Vuitton leather bags and Bulgari’s diamond and emerald encrusted jewelry.
LVMH, the Paris-based holding company behind luxury Christian Dior gowns, Dom Perignon champagne, and Guerlain perfume, said yesterday it has agreed to buy Italian jeweler-to-the-stars Bulgari SpA in a cash-and-shares deal worth $6 billion.
LVMH managing director Antonio Belloni said Bulgari was the biggest acquisition in LVMH’s more than 20-year history of snapping up luxury brands, from Kenzo to Givenchy and Marc Jacobs.
Both companies presented the deal as a way to quickly bulk up LVMH’s luxury watch and jewelry business, to achieve critical mass and accelerate its growth into hot developing markets.
“We are adding to the mature markets a lot of new markets that are more and more promising like Russia, China, the Middle East, Brazil, India,’’ said Francesco Trapani, Bulgari’s chief executive, who will get a seat on LVMH’s executive board in addition to heading up the group’s watch and jewelry division, which also includes De Beers, Chaumet, and Hublot.
LVMH’s watches and jewelry business doubled its profit last year to $179 million, on sales that grew 29 percent to nearly $1.4 billion. Acquiring Bulgari, a 127-year-old watch and jewelry maker will roughly double the division’s sales to $2.9 billion.
“To be honest, LVMH is the perfect partner,’’ Trapani said, saying the deal’s vital ingredients were LVMH’s know-how and attention to detail, and its scale, with a quality global management structure.
Fashion industry observers applauded the deal, saying LVMH needed to plug a gap in its luxury brand portfolio.
“They’ve wanted to buy a big jewelry company for a while,’’ said Long Nguyen, founding editor of US-based Flaunt magazine. “Not only is it great for them to buy the Bulgari name but they’re also buying the savoir faire of the house for all their stable of brands,’’ Nguyen said.
Another fashion insider, Wall Street Journal columnist Christina Binkley, said “LVMH is good at taking these family-owned gems and lighting a fire under them.’’
Binkley cautioned that some Bulgari customers appear wary about change at the storied jeweler. “I was looking at the Twitter-sphere this morning and there were a lot of longtime Bulgari customers who were sad about the news,’’ Binkley said.
Investors welcomed the deal, bidding up LVMH shares 1.4 percent to $158 in Paris.