Injecting old assets into new ideas and visions.

Rehousing old businesses with enduring brand value can be a great move, if executed right.

One of the best rehousing of assets recently was the US$52 billion injection of the Murdoch controlled Hollywood assets into Disney. Like with like assets, control of streamer Hulu, and the creation of a super content platform with unrivaled global distribution - just some of the benefits of the rehousing.

Disney stock is up 37% since the deal closed in March of this year.

Content, scale and reach!

A $16 billion breakfast.

Even multi-century old European brands need to move with the times.

Today, French conglomerate LVMH (Louis Vuitton Moet Hennessy) agreed to spend $16 billion cash to buy iconic jeweller, Tiffany & Co.

It too is looking to improve content, scale and reach.

In addition to a rather large haul of diamonds and jewels, LVMH gets 300 stores globally (that’s $53m per store - providing an indication of brand value) and massive distribution in the US and Asia.

The deal should deliver the group access to the Asian millennial market, a big luxury spend catchment and a perfect destination for the enduring pulling power of the iconic Tiffany & Co. brand.

Millennial preferences will also be satisfied through LVMH’s e-commerce investments, which I’ll talk about a little later.

Data suggests only 20% of Tiffany’s sales are in Europe. And, in exchange, that’s what LVMH (14 times the size of Tiffany & Co) brings to Tiffany’s.

Doubling down. 

The LVMH, Disney and similar multi-billion dollar bets being placed in consumer goods and services land are far from risky. They are necessary.

In the face of seismic generational shifts in fashions, tastes and the way consumers want to share experiences (courtesy of digital disruption) consumer-facing retailers have worked out that standing still in a changing world is death by a thousand cuts.

In fact, doing nothing is where the risk really lies.

House of luxury brands.

To combat this and take larger share, Bernard Arnault, LVMH’s CEO, has been on a buying spree to add to an already massive house of brands.

Today, he controls over 70 household brands which are mostly luxury and are either owned or controlled by LVMH. They are spread across wine and spirits, fashion, leather, jewellery, watches, perfume, cosmetics, luxury yachts, hotels and bicycles.

There are wine brands close to home including Cape Mentelle in Margaret River, and not that far away in Marlborough, New Zealand, where Cloudy Bay is based. Then there are iconic labels such as Dom Perignon, Hennessy, Ruinart (one of my favorites), Veuve Cliquot and the spectacular Château d'Yquem, plus in the personal adornment department there is Dior, Fendi, Louis Vuitton, Berluti, Givenchy, TAG, Hublot and Bvlgari, to name only a few.

The French conglomerate also controls non-traditional brands such as Sephora and Fenty Beauty by Rihanna, along with duty free platform DFS, and Belmond Hotels, a global integrated lifestyle platform of luxury hotels, rail and cruises.

LVMH has also embraced e-commerce via its own 24s.com site and through an investment (via the CEO’s family office) in Lyst - a global fashion search marketplace.

Assuming the deal goes through, it will also control Tiffany & Co.

But, just doing deals has never assured anyone success.

This is about rehousing brands with strategic fit into a super platform (not dissimilar to Disney) with way more reach and better content and customer experience than before. It’s about gaining share and building competitive advantage.

And in the jewellery vertical, Tiffany & Co delivers Bernard Arnault an ability to kick Cartier (owned by Richemont) firmly in the jewels.

With trillions of euros, dollars, yen and yuan of free and easy money sloshing around, courtesy of central banks, it is likely there will be many more double down bets like this to come.

Stay tuned.

Mike.

NextLevelCorporate is a leading financial and strategic corporate advisory firm with a multi-decade track record which speaks for itself. Helping clients in all industries to prepare for, respond to and execute transformative corporate finance strategies and transactions, is our passion.