LVMH: The luxury conglomerate has been on an acquisition spree — and it has made its CEO the wealthiest person on Earth

5/25/21 8:00PM

Europe doesn't have a big tech sector. It doesn't have an enormously cheap manufacturing industry. What it does have is huge luxury goods companies — and this week the biggest of them all, LVMH (Moët Hennessy Louis Vuitton), saw its share price hit an all-time high. That also meant that Bernard Arnault, LVMH's CEO, became the world's wealthiest individual — unseating Elon Musk and Jeff Bezos thanks to a $186bn fortune, mostly in LVMH stock.

‍An eye for a bargain

‍Across its 75 brands, which LVMH calls "houses", you'd be hard pressed to find any products that could be considered cheap. Louis Vuitton, Christian Dior, Loro Piana, Bulgari, Tag Heuer, Tiffany & Co. and Hublot are just some of the bigger brands in the LVMH stable, and all are expensive. So it's ironic then that Bernard Arnault has built LVMH with an eye for a bargain, acquiring numerous brands — that have often been family-owned for years and years — and adding them to the LVMH stable.

LVMH's most recent acquisition, Tiffany & Co., will add more than $4bn of revenue to its Watches & Jewelry division when it is fully accounted for next year and will increase LVMH's sales in the US. But, just like every acquisition before it, Arnault isn't sitting on his laurels after the Tiffany deal. Last month LVMH invested €75m ($92m) into struggling Italian shoemaker Tod's, fuelling speculation of a larger deal. Tod's, which is still majority owned by descendants of the Italian founder, would be a textbook LVMH target. The dealmaker Arnault isn't done yet.

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Paramount reportedly receives $24 billion from Gulf funds to back its Warner Bros. takeover

Three Middle East sovereign wealth funds have agreed to back Paramount’s takeover of Warner Bros. Discovery to the tune of roughly $24 billion, according to Wall Street Journal reporting.

The company’s triumph over Netflix in the bidding war came thanks in part to financial backing from Oracle cofounder Larry Ellison, billionaire father of Paramount CEO David Ellison.

Saudi Arabia’s PIF, which last year led the $55 billion deal to take Electronic Arts private, will provide about $10 billion in the deal. The Qatar Investment Authority and Abu Dhabi’s L’imad Holding Co. is also involved.

According to the WSJ, the funds will not receive voting rights in the combined Paramount-Warner company. Those working on the deal don’t expect the Gulf funds’ involvement to spark any additional regulatory reviews.

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The company’s triumph over Netflix in the bidding war came thanks in part to financial backing from Oracle cofounder Larry Ellison, billionaire father of Paramount CEO David Ellison.

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JetBlue is raising its bag fees as fuel costs squeeze airlines

JetBlue will reportedly hike its bag fees, as the cost of jet fuel continues to climb amid the war in Iran. It’s the latest example of carriers finding ways to push rising costs onto travelers.

Last week, United Airlines CEO Scott Kirby said that if fuel prices remain elevated, fares would need to rise another 20% for his airline to break even this year.

As CNBC reported, when one airline raises fees, others tend to follow.

Earlier this month, JetBlue hiked its first-quarter outlook for operating revenue per seat mile to between 5% and 7%, saying that strong Q1 demand helped “partially offset additional expenses realized from operational disruptions and rising fuel costs.” Now, the carrier appears to be making moves to further boost revenue to offset those costs.

Earlier on Monday, JetBlue rival Alaska Air lowered its Q1 profit forecast. The refining margins for the carrier’s cheapest fuel option — sourced from Singapore and representing about 20% of Alaska’s overall supply — have spiked 400% since February.

JetBlue did not immediately respond to a request for comment.