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Le Conglomerateur Formidable

Macy’s buys Tiffany. At first sight, the purchase of a controlling stake in Italy’s Gucci by France’s Pinault-Printemps-Redoute certainly looks …

Macy’s buys Tiffany. At first sight, the purchase of a controlling stake in Italy’s Gucci by France’s Pinault-Printemps-Redoute certainly looks this way, because Gucci is one of the world’s leading purveyors of high-priced luxury goods, and “PPR” is very much a middle-market retailer group.

But, with its seriously diversified interests, PPR is clearly more than just a retail company. Its business-to-business operations distribute electrical equipment, building materials, and office products, and the firm also operates France’s leading consumer credit group. Most recently, PPR has acquired 42 percent of Italian luxury goods company Gucci Group.

And, to understate it, the man behind PPR, Francois Pinault, is much much more than the majority owner of a retail store chain. His personal fortune has been estimated by Forbes at more than $6 billion, his private holding company not only controls the giant retailing conglomerate, but also has an intellectual power base through a major interest in France’s #1 TV chain and its biggest book chain, owns such priceless gems as Christie’s and Chateau Latour, and recently snapped up another bastion of luxury goods in Yves Saint Laurent, which in turn owns or controls Van Cleef & Arpels and Oscar de la Renta.

Pinault’s recent moves into “le luxe” would add several billion dollars more, and they also raise the question of whether he is now planning to challenge Bernard Arnault of LVMH-who owns or controls Dior, Lacroix, Givenchy, Dom Perinea, Chateau Yquem, Hennessy and Louis Vuitton, among many other top names-for leadership of the world’s entire luxury goods business.

The newsmagazine Le Point-which, coincidentally or not, is also Pinault owned                thinks so. When Pinault launched his bid for Gucci, Le Point called it a “declaration of war” between the two billionaires. But in the judgment of a banker closely involved in Pinault maneuvers, who asked to remain anonymous, Pinault is interested in such businesses as Gucci and Saint Laurent simply as a means to augment his empire. And the authors of a recent Pinault biography contend that his sole interest is the acquisition of wealth.

In this, Pinault has been spectacularly successful. A high school dropout, he began his business career as a small Breton businessman with a loan of $20,000, and is now considered the second richest person in France-right behind L’Oreal heiress Liliane Bettencourt. Along the way, a speculation in commodities reportedly netted him some $2 million on an investment of $60,000, and one deal in the ’70s typified many that followed: anticipating the effects of the oil embargo, he sold one of his businesses for $6 million in 1973-and bought it back for $1 million in 1974.

If there is a shift away from traditional methods of corporate management in France, Pinault is definitely not part of it. His success is not based on any known business school precept or philosophy, except the profitable principle of buying low and selling high:

In the view of the magazine L’Express, he has the instincts of a “predator,” and indeed his holding company, Artemis, takes its name from the Huntress of classical mythology. Ten years ago, his group already included 113 companies, and one of the most strikingly non-B School aspects of Pinault’s approach is the lack of synergy between units-or, apparently, of a strategic design: it might be fair to compare his methods with those of Charles Bluhdorn, James Ling, or other celebrated American conglomerateurs; according to a former associate, quoted by his biographers, Pinault “acts on instinct, and constructs his strategy afterwards.”

His biographers however believe that Pinault resembles Joseph P. Kennedy, and they note that while Pinault’s own legend depicts him as a capitalist “pur et dur,” this ignores his associations with parties on both sides of France’s political hierarchy. At one point, they report, he bailed out former left-wing Prime Minister Pierre Beregovoy by providing jobs in “Bere’s” parliamentary district—-and at another, he did much the same for right-wing President Jacques Chirac.

Moreover and most significantly, they point out, he was one of the very few top French businessmen to have been with Chirac “on Elba”-when, some months prior to his election in 1995, the President was at the bottom of the polls.

In France’s next presidential election, Pinault’s high-powered media interests may make him an important player. Otherwise, given the apparent absence of a controlling strategy except that of making money, it’s difficult to forecast where the future may take the man from Brittany. He certainly isn’t averse to moving across the Atlantic, and, although he recently disposed of such properties as the ski resort of Vail, he could be a bidder for any U.S. asset that looks undervalued. If Macy’s-or for that matter Tiffany-were on the market, who knows?


 

FRANCOIS PINAULT

Chairman and Chief Executive Pinault-Printemps-Redoute

In his bid for Gucci, Pinault “declared war” on Bernard Arnault of LVMH, according to Le Point.

Age: 63

Birthplace: Champs-Geraux, a village in Brittany.

Education: Saint Martin, Rennes.

Family: Married, three children.

Interests: 24 hours a day, 7 days a week-business.

Spare Time Interests: Cycling-particularly in the forests surrounding his chateau near Ramhouillet; and contemporary art, owns works by Picasso, Henry Moore, Rothko, Rauschenberg, and Jasper Johns, among many others 

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