Richer Than Elon Musk, He Bought Tiffany at a Tough Time. He’s Got a Gem Now.
There’s a reason Bernard Arnault is the world’s richest person. The chairman, CEO, and controlling shareholder of LVMH Moët Hennessy Louis Vuitton LVMUY +1.26% , the world’s largest luxury-goods merchant, knows how to buy companies and integrate them. He’s a shrewd negotiator, too.
On LVMH’s recent earnings call, Arnault crowed over his company’s 2021 purchase of Tiffany, saying that Tiffany’s earnings had doubled since the deal. Tiffany, for the first time, will have more than one billion euros [$1.08 billion] in profits, he said, adding: “We were barely at half that when we acquired the business. Everyone said to me, ‘Why are you buying this business at that price; it’s far too much.’ But, I mean, it wasn’t perhaps managed in the most dynamic way. I won’t dwell on that….but if it were listed today, [it would] probably [be] worth twice as much.”
The deal was contentious. LVMH agreed to pay more than $16 billion for the U.S. jewelry retailer in late 2019, then tried to back out in September 2020 after the pandemic hit Tiffany’s sales and revenue. The companies then recut the deal. LVMH ultimately paid $131.50 a share for Tiffany, below the initial $135, or about 30 times Tiffany’s 2019 net income of $550 million. The current multiple is roughly 15 times, based on Arnault’s statement that earnings have doubled.
LVMH has excelled at acquisitions, including buying cosmetic retailer Sephora in 1997 for little more than $200 million and luxury jeweler Bulgari for $5 billion in 2011. Arnault, 73, is now worth $190 billion, according to Bloomberg’s tally, beating out No. 2-ranked Elon Musk, with $170 billion.