Understanding the Christian Dior $13.1 Billion Buy Out and the Structure of LVMH Subsidiaries
The world’s richest luxury company, LVMH Moët Hennessy Louis Vuitton, announces plans to buy the Christian Dior fashion house in a $13.1 billion deal. Although the two already have a complex business relationship, the new proposal adds another dimension to the portfolio of LVMH subsidiaries and brands. The business plan is being led by by French billionaire Bernard Arnault, majority shareholder of Dior and CEO of LVMH. Considering that Christian Dior is already the main holding company of LVMH, how exactly does LVMH buying Dior for $13 billion make sense?
Unconventional is a term that best describes the LVMH business structure. Founded in 1987, the French luxury goods conglomerate is a merger between fashion brand Louis Vuitton and cognac/champagne supplier Moët Hennessy. Through its multi-dimensional framework of subsidiaries, Arnault and his partners are the number 1 luxury goods company in the world. Let’s simplify the LVMH – Dior relationship and how it fits into the extended portfolio of LVMH subsidiaries and luxury brands.
LVMH Subsidiaries and Christian Dior S.A. Explained
- Louis Vuitton Moët Hennesy ‘LVMH’ is a luxury fashion goods conglomerate based in France.
- French billionaire, Bernard Arnault, owns private holding company, Groupe Arnault. He is also the chairman and CEO of LVMH and also the chairman of Dior.
- Christian Dior is a French luxury goods company controlled by Bernard Arnault due to his majority 42.42 percent share capital of the brand.
- Christian Dior S.A. (Dior’s business name) is also the holding company of LVMH, inadvertently.
- LVMH owns 100 percent of another holding company, Financière Jean Goujon.
- Financière Jean Goujon owns 42.42 percent of current Louis Vuitton Moët Hennesy share capital.
- Therefore, Christian Dior actually owns a majority share of LVMH with 59.52 percent voting rights from its 42.42 percent ownership of LVMH share capital.
- However, the web of LVMH subsidiaries don’t end there. Christian Dior is also controlled by another French holding company, Financière Agache S.A. The Financière Agache.
- Then again enters Bernard Arnault who so happens to control the Financière Agache through his eponymous holding company Arnault group.
- Those are just the basics. There are a total of 60 LVMH subsidiaries that each control a portfolio of luxury brands.
The New Dior Proposal
Essentially, the new deal will simplify the LVMH Christian Dior relationship by buying out the remaining minority shareholders. LVMH Moët Hennessy Louis Vuitton already owns one of the fashion house’s lines, Parfums Christian Dior. With the execution of the proposed $13.1 billion buy out, LVMH will gain ownership of Christian Dior haute couture, leather, both men’s and women’s ready-to-wear, and footwear lines. However, Bernault won’t be physically handing over billions of dollars. Bernard and his family are offering a mix of cash and Hermes international shares for the massive purchase.
So wait, does Dior remain a LVMH subsidiary or is it now the same brand under the guise of the Dior name? Let’s just say, Bernard Arnault will certainly remain the richest man in France. His worth increased by $5 billion following the recent announcement, making him the 8th richest person in the world.