As Long As The Most Noble Global M & A Strategy

Core brands: leather goods LV, Fendi, liquor Cognac Hennessy and champagne MOET & CHANDON and Tang Pei Lenon, its turnover accounted for 50% of the group's total turnover, operating profit accounted for more than 70%, as of December 31, 2007, LVMH's market value reached 57 billion 770 million dollars, for many years in the ranks of luxury goods company's boss.

Data show that the net profit of LVMH in fiscal year 2006 is about 3 billion 184 million US dollars. From absolute value, it is the most profitable luxury company. Its net profit growth rate reaches 29.5%, ranking first.

As a group with the most luxury brands, LVMH's industry status and achievements today largely depend on M & A and post merger management skills.

At the time of acquisition, LVMH bought the undervalued luxury brands at a lower price when the economic cycle was at the bottom of the market. After the acquisition, it also made use of its unique "LV integration rule" to improve the management of the difficult brands. In the operation, the group maintained a relatively independent brand while sharing the channel resources of the group, giving full play to the synergy effect, and making efforts to build up the core brand such as LV, so as to promote the value of all the brands of the group.

Mergers and acquisitions create luxury goods.

So far, LVMH has about 59 luxury brands.

From 1987 to early twenty-first Century, LVMH took 15 years to build the huge luxury group.

In 1987, the company successfully merged Louis Vuitton holding company and established LVMH company (Vuitton).

The paction was completed through stock swap, and every 2.4 shares of Louis Weedon stock were traded for 1 shares of mohin stock.

Mohin is a combination of MOET & CHANDON, the largest champagne manufacturer in France and Hennessy, the largest Cognac brandy manufacturer in France.

Subsequently, LVMH was unable to accept and continue to purchase in other luxury sectors.

In terms of clothing, LVMH acquired French brand Givenchy, KENZO (Kenzo) and Celine, Spanish brand Loewe, British shirt brand Thomas Pink, american apparel brand Donna Karan and Marc Jacobs, Italy brand Emilio Emilio and so on.

In leather and leather shoes, it bought Italy leather traders Fendi and StefanoBi, and French shoe maker Berluti (Berluti). Now LV and Fendi are all star brands made by LVMH.

In jewelry and timepieces, swallowed Chaumet, Zenith, Omas (Omas) and Ebel, and bought Heuer for $474 million.

In perfume and make-up, KENZO perfume and Perfumes Loewe are purchased to further enrich its perfume department.

In 2001, LVMH bought 6 cosmetics companies at once: Bliss, Hard Candy, BeneFit Cosmetics, Urban Decay, Make Up For, and Make.

In terms of retail channels, LVMH1996 bought a DFS duty-free shopping mall for $2 billion 500 million in 1997, bought a cosmetics retail store in 1997, and set up an e-commerce website eLuxury in 2000, and acquired two French high-end department stores Le Bon March E and Samaritaine, and a yacht retail companies Cruise Line Holdings Co..

In terms of media, D.I group and two magazines purchased in 2001: Connaissance des Arts and Art & Auction.

In addition, LVMH took over from Ford Motor Co in 2007 to become the new owner of Aston Martin, the top British car manufacturer in the Aston Martin.

Through a series of acquisitions, LVMH has become a luxury magnate covering almost all major luxury subdivision industries, including wine, leather goods, clothing, perfume, cosmetics, jewelry, watches and clocks, retail and so on.

All this is largely due to the leadership of Bernard Arnott, the incumbent.

Bernard Arnott's Groupe Arnault indirectly holds LVMH29.38% shares through Christian Dior SA (short for CDI), and Arnott's characteristics of mergers and acquisitions give LVMH the character of king of mergers and acquisitions.

With the expansion of LVMH, Bernard Arnaud's personal wealth also soared, rising from ninety-fourth in Forbes's rich list in 1997 to 17 in 2005, ranking seventh in 2006 and ranking among the world's top 10 richest men.

The acquisition of LVMH is not all a success.

For example, Christian Lacroix was eventually sold to Falic, the second largest duty-free dealer in the United States. Yu Bao and Aucland were also sold for various reasons. The luxury brand Omas, which mainly produced pens, was sold to China's high-end watch and clock channel Xinyu Hendry, who lost to another luxury giant PPR in the Gucci share battle. However, none of these influences the pace of LVMH becoming the industry leader.

LVMH's way of success is to pursue "the most noble" global acquisition strategy. LVMH has a "noble" regional distribution map of luxury goods. These top brands scattered around the world are what they dream of, such as France's world-famous perfume, champagne and Cognac, which are distributed in France, the United States, Argentina, New Zealand and other places of origin. Scotland's whisky, Swiss watches, Italy leather goods, clothing and sports cars, Cuban cigars are all famous, while China's liquor, ceramics, silk, tea leaves and jade are all expected to become the top luxury goods.

Through the analysis of the geographical distribution of luxury brands, we find that in addition to Argentina, Cuba and New Zealand, several other luxury goods producing areas (such as France, Italy, Britain, Germany and Switzerland) all have a strong sense of history and advocate King (Huang). The French Empire, the ancient Rome Empire, the British Empire and the German Empire are all inexhaustible historical and cultural resources.

Luxury is to inherit a culture rather than to sell a product.

The two major characteristics of luxury goods are "cultural characteristics" and "consumption". The first thing to bear is its cultural characteristics, which is characterized by its brand's heavy and noble history.

Consumption refers to the fact that luxuries generally involve people's clothing, food, shelter and play, and they are people's daily necessities.

The sense of history is long and new, and the experience of time is still bright.

The nobility refers to the work of famous people, or the furniture of the Emperor (emperor), or the works of famous celebrities, or the recognition of social celebrities and their noble qualities.

Among them, Wang (Huang) room supplies are most likely to be luxuries, because they represent the highest level of technology at that time. The quality is excellent, the production process is excellent, the materials are exquisite, the modeling classics are unique, and the limited issuance is the crystallization of the wisdom of a nation and the embodiment of social wealth.

The world's top luxury brands are inextricably linked to royalty, royalty and celebrities.

For example, the brilliance of Swiss watches is largely due to the royalty of the European royal family. The faithful users of Guerlain include the queen of Europe, Queen of Vitoria, Queen Bella of Spain, Queen Xi of Austria, and the special perfume of all European countries.

In 1815, Hennessy became the main wine supplier of the French parliament.

The Kelly bag, once famous, was made by the top leather merchant, Hermes, for the Morocco Princess Grace Kelly. The American brand that didn't accumulate enough history was to follow the fashion boutique route to win the new image of the new era.

China, which is still a newly rising country, is the heart of the world's culture and economy. It has a history of 5000 years, imperial power and rich cultural treasures in 2000. History, imperial power and culture are the core elements of the top luxury products. China is expected to become a big country of luxury goods and a big consumer country.

It is positioning the global search for the most noble brand acquisition strategy, making LVMH's income diversification, hedging business risk and exchange rate risk.

In 2006, LVMH accounted for 37%, 30% and 26% of turnover from Europe, Asia and the United States respectively. The corresponding turnover accounted for 42%, 37% and 20% respectively. Only three of the three luxury goods groups had more than 70% PPR dependence on the European market.

First of all, the acquisition cost should be reduced by using the economic cycle.

The two major mergers and acquisitions that LVMH experienced in history has been in the low ebb tide, one in 1987-1988 years and the other in 2000.

In 1987, the stock market crash in the US led to a stock market capitalization of at least 2 trillion dollars, and many listed companies fell to a low level until Clinton came to power.

In 1997, the Asian financial turmoil greatly weakened the purchasing power of the wealthy class in Asia, especially in Asia, the number one buyer of luxury goods. Japan's economy continued to decline since 1996, resulting in a decrease of 1/3 in the luxury sector sales, which shrank by about 10 billion 800 million dollars a year.

The collapse of the Nasdaq stock market in 2001 and the "9. 11" incident in the United States reduced consumer confidence by 18 percentage points, and the confidence in consuming luxury goods was much lower than in 1987.

In addition, the appreciation of the euro, the depreciation of the Japanese yen and the US dollar have exacerbated the pressure of foreign exchange losses on many luxury companies that dominate the Japanese and US markets.

As a result, the economic downturn depressed the valuation of many luxury brands, greatly reducing the LVMH acquisition consideration.

In addition, the climax of the second luxury group's climax is also in the two stages.

The exception is that PPR bought a total of Gucci Group at a high cost of $8 billion 800 million, but it was also because LVMH joined the result of substantially raising the purchase price.

Secondly, the "LV integration rule" is used to improve the brand management and enhance the acquisition benefits.

Luxury brands in difficulties (such as Celine, Zenith, Pucci and Ruinart) are often reborn under the operation of LVMH.

The way of LVMH is to "excavate brand history - to outline brand characteristics - to find suitable designers to express brand genes - to rationalize sales channels - to create a market image."

The pformation of LV is a classic example.

In 1986, before the merger of Mohun and Louis Weedon, the company's total turnover amounted to 1 billion 340 million dollars, while Louis Weedon was only 290 million dollars, of which Veuve Clicquot accounted for 236 million dollars, when the sales volume of LV brand products was rather poor, with a total volume of only 54 million dollars.

In the late 80s of last century, LV was caught in a price and tedious dilemma. In 1997, Arno hired Mark Jacobs as the creative director of the company, so that LV turned perfectly and became the most important source of profits for LVMH group. LV turnover accounted for 1/4 of the LVMH group's total turnover, and business profits accounted for about 60% of the total operating profit of the group.

The same success is the restructuring of women's clothing brand Celine.

Before LVMH took over, Celine's sales continued to slide, with a loss of $16 million.

Arnott turned corruption into magic again, and appointed Jean-Marc, number two of LV (Jean-Marc Loubier) as the head of Celine.

After Lubiya took office, he made several changes.

First of all, as Mark Jacobs did to Louis Weedon, the history of the brand was excavated. When Celine opened in 1945, it was a high-end shoe retailer in Paris. Celine was then packaged as a modern luxury brand by the city of Paris. It is a symbol of Renaissance in Europe and Europe.

Second, the Celine business model previously dominated by clothing and supplemented by handbags has been pformed into a leather product with a higher production profit margin.

Third, shorten the flow of products from several months to a few weeks, which not only reduces the cost of inventory, but also speeds up turnover, thereby increasing profits.

In another fashion brand Pucci, LVMH also uses LV's business strategy.

Pucci clothing was once famous in the 60s of last century, but later ran into a difficult position.

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