Ben Gilbert: evaluation

Transcript context

…Yes. When the merger happens and this new LVMH uber corporate entity is created, it's Chevalier who takes the chairman position there and Racamier is the number two. He's still running the Louis Vuitton business, Chevalier's running the Moet-Hennessy business. There were never any plans to integrate these assets. The operating companies were going to stay the same. Indeed, the entities themselves are still separate. There's just a new parent holding company designed to prevent external corporate takeovers. All the families combined own over 50% of that company, the voting rights, and they can prevent corporate takeovers. Which is funny because even though both of them detected that there might be activist investors, there's a bunch of their shares being bought up, it's a red herring because in combining, they actually assured their own destruction versus if they had stayed separate. We don't know the counterfactual, but they might have been fine. Yeah, right. They might have been and they certainly would have been if they hadn't IPO'd the minority stakes for the families to monetize, so there's a lesson there. Pretty much right away, you can see the writing on the wall here. These are two French dudes with some pretty big egos. The trouble starts. Racamier, this is so petty, but it's what actually happens, he has some stationery printed for the new LVMH company in which his name appears above Chevalier's on the stationery. Chevalier rounds up all the stationery and has it destroyed. I feel like we're talking about the American Revolution or something here. This is ridiculous. They start fighting in the press. They just merged these companies and Racamier gets quoted. "Champagne can be found on the shelves of every corner supermarket," I literally bought mine at Whole Foods last night. "But our leather goods require exclusive distribution." He's totally right, but you can imagine how that lands with Chevalier. It's not good. Early the next year, in 1988, there's another potential crisis out there. For some reason, the trading volume in LVMH stock starts rising sharply again, which is a sign that maybe there's a takeover waiting in the wings. The families control 51% of the company, the combined families at this point. But remember, these families don't really like each other. There are so many family members. If one group of families gets persuaded by a takeover attempt to join forces with an external party, LVMH could be back in play. This is not good.…

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