Project Description:

luxury wars-lvmh vs. hermes
the basic rule is to be there at the right moment, at the right place, to seize a promising opportunity in an envi- ronment guaranteeing sufficient longer-term growth.
—bernard arnault, chairman and ceo, lvmh.
patrick thomas focused intently on not letting his hands shake as he quietly closed the phone. he had been riding his bicycle in rural auvergne, in south-central france, when his cell phone had buzzed. he took a long deep breath, closed his eyes and tried to think. he had spent most of his profes- sional life working at hermès international, sa and had assumed the position of ceo in 2006 after the retirement of gean-louis dumas. the first non-family ceo to run the company was now facing the biggest threat to the family controlled company in its 173-year history.
the lvmh position
the man on the other end of the phone had been none other than bernard arnault, chairman and ceo of lvmh (moët hennessy louis vuitton), the world’s largest luxury brand company, and the richest man in france. arnault was calling to inform him that lvmh would be announcing in two hours that they had acquired a 17.1% interest in hermès. thomas had simply not believed
arnault for the first few minutes, thinking it impossible that they could have gained control of that significant a stake without him knowing about it. arnault assured him it was no joke and that he looked forward to participating in the company’s continued success as a shareholder before repeating again that the press release would be made in two hours (exhibit 1). thomas snapped out of his stupor and snatched up the phone; he needed to call hermès’ executive chairman, bertrand puech, and begin assessing the potential threat, if it was indeed a threat.
hermès international. hermès international, sa is a multibillion dollar french company that makes and sells luxury goods across a number of different product categories including women and men’s apparel, watches, leather goods, jewelry and perfume. thierry hermès, who was known for making the best saddles and harnesses in paris, founded the company in 1837. the company’s reputation soared as it began to provide its high-end products to nobility throughout europe, north africa, russia, asia and the americas. as the years wore on, the company began to expand its product line to include the finest leather bags and the most luxurious silk scarves on the market, all while passing the company down through generations and maintaining family control.
despite going public in 1993, roughly 60 direct descen- dants of thierry hermès, comprising the 5th and 6th gener- ations, still controlled approximately 73% of the company.
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