TheChek News Flow

The luxury investment community got excited this week when it found out that LVMH CEO and controlling shareholder Bernard Arnault had personally acquired a small stake in Richemont as part of his many investments. Immediately many people thought: Arnault is preparing a bid for Richemont, owner of the No. 1 jeweler Cartier and the success story Van Cleef & Arpels.

If Arnault was really planning to make an offer for Richemont, he would not have let the world know that he had invested in the Swiss luxury group. That’s not his way of doing things. The information was released by his entourage as part of a profile published in Bloomberg Businessweek on Tuesday. Neither the precise size of his stake nor the timing of the investment was given. It’s likely that Arnault, a shrewd investor, bought Richemont shares several months ago, in December or January, when they were around 25-30 percent cheaper. In terms of business, Arnault knows exactly what’s happening at all of his rivals since he gets the numbers from the owners of department stores and malls. So he knows when it’s a good time to buy their shares. LVMH declined to comment on the move.

The fact that Arnault let it be known is interesting. It could be his way of signaling to Richemont that the door is open if ever the group’s Chairman and controlling shareholder Johann Rupert wanted to build some sort of alliance with LVMH. In January, when Arnault presented the group’s annual results, he said he had good relations with Rupert, adding that if the Richemont Chairman “needs support to maintain his independence, I will be there.” Buying a stake in Richemont is a nudge, a way for Arnault to remind Rupert that he’s open to discussions should Rupert be interested.

Arnault loves keeping everyone guessing about his next move. He told Businessweek the group was still on the prowl for acquisitions. “I know several brands would fit very well, and I know that the owners would be very happy,” he told the magazine. On his target list are Armani and Prada and watch giants such Patek Philippe and Audemars Piguet, according to industry sources. However, all of these brands have said publicly that they are keen to remain independent and have organized themselves accordingly. However, should they suddenly have a change of heart, they know which door to knock on.

The news of Arnault’s stake in Richemont overshadowed another move by LVMH that speaks volumes about the group’s eagerness to expand and become an even bigger player in watchmaking.

On the same day Arnault’s interview was published, LVMH announced its acquisition of L’Epée 1839, a prestigious name and Switzerland’s last remaining manufacturer of high-end table clocks. In recent weeks, there had been industry chatter about LVMH being in talks to buy a watchmaker on top of Vaucher Manufacture Fleurier, which it is looking at now.

Now we know who it is. But it may not stop here. LVMH and archrivals Richemont, Chanel and Hermès are in an arms race to secure suppliers and acquire the savoir-faire needed for a competitive edge. Since L’Epée is unique in its field, for LVMH it made a lot of sense to buy it.

The business is not tiny. Revenue is estimated to be more than €60 million. Sales rose 40 percent last year, and the company expects roughly the same level of growth this year. This is quite a feat considering that the Swiss watch industry is going through a downturn and that Swiss watch exports have declined since the beginning of the year.

L’Epée gives LVMH access to rare skills and know-how. The company’s creations are all produced in-house from beginning to end, from the escapements to the polishing of every element. The wheels and the many parts making up the movement of a table clock are much bigger than those used in watches.

L’Epée masters the art of complications – other features than giving the time – such as retrograde seconds, power reserve indicators, perpetual calendars, tourbillons and striking mechanisms. One of its best-sellers is a blue cylinder-shaped race car called Time Fast that costs 39,375 Swiss francs excluding VAT. Another is an object in the form of a hand grenade that comes in all sorts of bright colors fitted with a vertical movement. It costs 10,900 Swiss francs excluding VAT. L’Epée’s vast collection includes table clocks in the shape of spiders, towers, robots, hot air balloons and medusas, retailing between €5,000 and €55,000.

In 2014, to celebrate its 175th anniversary, the company released a Two Hands Flying Tourbillon table clock designed by Vincent Calabrese and limited to two pieces that cost 500,000 Swiss francs each.

L’Epée has been supplying customized table clocks to several LVMH brands for years. One of its oldest customers is US jeweler Tiffany & Co., with which it has been working for more than 40 years. LVMH bought Tiffany in 2021. Since last year, Tiffany has been selling L’Epée’s popular race car clocks in its trademark robin’s egg blue, retailing at $42,000 excluding VAT, and since January, it has offered a New York-style taxi clock costing $55,000.

The deal with LVMH came about naturally. Starting last year, L’Epée has been supplying Louis Vuitton with customized Hot Balloon clocks. The luxury brand wanted to increase its orders but L’Epée did not have the financial resources to lease the machines and rent the extra space to increase production. The initiator of the transaction with LVMH was José Fernandes, who runs La Fabrique du Temps, the provider of movements for Louis Vuitton watches, a business overseen by Jean Arnault, Bernard Arnault’s youngest son. Negotiations were subsequently led by Jean’s older brother Frédéric Arnault, who used to run TAG Heuer and is in charge of LVMH’s watch division since January.

“We've been through a number of crises over the last 15 years, while maintaining our capacity for growth,” L’Epée CEO and artistic director Arnaud Nicolas told Miss Tweed in a telephone interview. “But today our financial capacities no longer allow us to invest at the level demanded by the market.” The Arnault family made an offer that Nicolas and his business partner Sébastien Mérillat could not refuse, not only in terms of valuation but also in that LVMH allows them to continue collaborating with any brand they wish. Chanel applies the same philosophy to its own suppliers. Working for many different brands feeds creativity. “To be able to work for whomever you want is essential to continue to be challenged,” Nicolas said.

In 2009 Nicolas and his associate bought a company called Swiza, the parent of L’Epée and table clock brands Matthew Norman and Swiza 1904. Back then, the business was nearly bankrupt. It took several years before it started breaking even. Sales really started to take off in 2011 when it introduced audacious table clocks that it calls “kinetic sculptures,” like the Duel, which features two sword-shaped retrograde second hands that fly back and cross every twenty seconds. The swords are meant to evoke the battle with time.

Another boost came from the brilliant watchmaker Maximilian Büsser, founder and CEO of the popular MB&F watch brand known for its futuristic designs and three-dimensional cases. Büsser is a highly regarded creative mind and a positive force in the ruthless world of watchmaking as he’s always there to help those in need, industry sources say. Büsser started collaborating with L’Epée in 2014 and since then, has helped raise the company’s profile with his audacious designs. Industry experts say Büsser gave L’Epée a certain coolness it did not have really before.

“We created a new niche with L’Epée: mechanical sculptures that tell the time,” Büsser told Miss Tweed. “For me, it opened up a whole new world of possibilities. I’m very happy to have helped develop this beautiful house.” The watchmaker has provided L’Epée with 15 new designs and plans to present a new collaboration with the company at the Geneva Watch Days at the end of August. L'Epée is a rare company. There are not that many table-clock makers left in Western Europe. You have for example Germany’s Hermle, owned and run by the Hermle family for four generations. It makes relatively traditional wooden and steel table clocks. One was commissioned by the German government as a gift to King Charles III during his state visit to Germany last year with Queen Camilla. There is also the UK’s AMS Clocks, which produces a vast range of timepieces including grandfather clocks. Both companies are said to be struggling financially, as clocks are not a top-of-the-mind item for many people these days. They tend to be regarded as old-fashioned and ill-suited for modern living spaces.

“Collectors over 40 all remember their parents’ or grandparents’ house with a clock,” Nicolas remarked. “It was often the main feature of the house. People used to save money to buy a clock.” Thanks to L’Epée, watch lovers have rediscovered table clocks and it’s now quite the status symbol to have a L’Epée in your living room.

Founded in 1839 by Auguste L’Épée, the company started as a provider of horological objects, watch components and music boxes. It sold the music box division to rival Reuge after World War II to replenish its coffers and focus on table clocks. Two years ago, as Reuge was facing financial difficulties, it was acquired by high-end watchmaker De Bethune, part of the retail and second-hand watch group the 1916 Company, which used to be called WatchBox. For De Bethune the idea was the same as for LVMH: to preserve unique savoir-faire and widen the scope of creativity.

LVMH is still on the lookout for more acquisitions in watchmaking, industry sources say. The French group is currently competing against Hermès – and possibly Richemont – to acquire the provider of high-end movements Vaucher Manufacture and other watch parts suppliers put up for sale by the Sandoz Foundation earlier this year, as Miss Tweed reported last week.

“Right now, they are deep in the due diligence process, sending questions to management,” one source with knowledge of the talks said of the bidders. “It’s likely that bids will be made next month and a deal announced before the end of the summer,” the industry source added.

When it comes to acquisitions, LVMH is like the famous Louis Vuitton canvas tote that bears the name “Neverfull.”

The group clearly takes its watchmaking interests seriously, but that didn’t stop somebody from LVMH from joking this week on the back of its acquisition of L’Epée – which means “sword” in French. Miss Tweed was speaking with this person about the Vaucher deal and mentioned Guillaume de Seynes, the Hermès executive who is leading the talks on Vaucher.

“This is the battle of his career, he’ll give it everything he’s got and die on the sword if he has to,” Miss Tweed said of de Seynes. To which the person from LVMH replied, “We bought L’Epée!”