LVMH acquires Bulgari

The news is all over the internet, LVMH will take a controlling stake in Bulgari and offer to acquire the whole enterprise. Coming soon after the stealthy build-up of a 20% stake in Hermes, this further reinforces LVMH’s reputation as an enormous machine mercilessly hoovering up luxury brands. That being said I see this as being positive for Bulgari. It may be a catalyst for the brand to realise more of its potential. 

While profitable and well known, Bulgari has been lagging behind its luxury goods and jewellery rivals. Its sales growth has trailed Richemont for instance, and though Richemont does not break out specific maison sales, industry insiders reckon Cartier has been growing faster than Bulgari.

And rumours have long been swirling in the watch industry about various family owned firms selling out to one of the big groups. PPR, owner of Gucci, owns a quarter of Girard-Perregaux for instance. And Richemont enjoys a strong balance sheet with a net cash position of EUR1.88 billion (for six months ended Sep 2010). So what’s next?


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