(Bloomberg Opinion) -- Another day, another billionaire takes a seat at the table at storied French publisher and retailer Lagardere SCA. Luxury tycoon Bernard Arnault yesterday joined Vincent Bollore and Marc Ladreit de Lacharriere as a player in a busy field of French establishment figures gaining influence at the company. For ordinary shareholders, it’s a very mixed blessing.
Lagardere is worth just 1.9 billion euros ($2.1 billion). Even a dramatic turn in its fortunes would make scant difference to a billionaire’s net wealth. But one titan after another has rushed to the aid of scion and general partner Arnaud Lagardere after London-based hedge fund Amber Capital U.K. LLP pressed for an overhaul of the company’s governance.
Bollore’s Vivendi SA and Ladreit de Lacharriere took big stakes last month, helping to defeat Amber’s resolutions for new board members at the annual meeting. (Vivendi has further upped its stake in the company to 16%.) That took the pressure off Lagardere personally. A new board might have pushed him to make changes to the so-called commandite partnership structure through which he controls the group with just a 7% shareholding.
But there was still a question of whether Lagardere might try to bolster his own finances by selling the commandite of his own accord. Surrendering control would, after all, be compensated. That would improve the financial position of the holding company through which he holds his Lagardere stake.
The intervention by Arnault further complicates the dynamics. Unlike the others, the head of LVMH Moet Hennessey Louis Vuitton SE is investing not in Lagardere the company directly but in Arnaud Lagardere’s personal vehicle, taking approximately 25%, reportedly for less than 100 million euros. While Arnault owns a radio station and two national newspapers, the move looks more personal than tactical. He and Lagardere’s father Jean-Luc were friends. Both families have sat on each other’s boards. He appears to be doing Lagardere a big favor.
The precise transaction terms aren’t clear. It’s likely that Lagardere himself receives some cash directly, with the rest going into the vehicle to cut leverage. Either way, it’s a huge boost for him. If the failure of Amber’s resolutions meant the board was unlikely to push to make Lagardere a normal French corporation, it’s now less likely that he will rush to seek the transformation himself.
As things stand, Lagardere may still technically be in control, but he has gained a co-pilot in Arnault, and the luxury billionaire now appears closer to the steering wheel than Bollore. It’s a messy situation and the logic for ending the commandite remains. With the pressure off, Lagardere is in a more advantageous position to negotiate terms to his liking. Minority shareholders can but hope everyone involved sees a mutual interest in getting round the table and talking.
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Chris Hughes is a Bloomberg Opinion columnist covering deals. He previously worked for Reuters Breakingviews, as well as the Financial Times and the Independent newspaper.
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