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Musk vs. Arnault: The contrasting acquisition strategies of two billionares

Updated: Mar 7

Being the two wealthiest men in the world, it comes as no surprise that Bernard Arnault and Elon Musk have been at the forefront in acquiring the biggest brand names, some of which ending in regret. This article reflects on the contrasting successes of these deals, exploring how their vast entrepreneurial differences were revealed in the actions they took to overcome setbacks.

In November 2019, Arnault, often referred to as ‘the Sun Tzu of Luxury’, agreed to pay $16.2 billion for Tiffany & Co, an offer that was a 37% premium to its current trading price. It was joining the likes of Louis Vuitton and Dior as subsidiaries in LVMH, the luxury good multinational conglomerate empire. However, when the Covid-19 pandemic hit soon after, the acquisition raised some eyebrows amongst Arnault and his advisors, who started showing withdrawals in the deal. After a seemingly endless bitter dispute, they agreed a lowered fee of $15.8 billion. Similarly, Musk's acquisition of Twitter in 2022 was also plagued with problems. Despite already owning a 9.2% stake, he made a spontaneous offer to buy Twitter for $44 billion, which was a 38% premium to where the stock had been trading and 44 times Twitter's EBITDA.

Musk’s immediate buyer’s remorse led to him trying all options to wriggle out of the deal. However, written evidence destroyed Musk's prospects of winning his court case appeal. After finally agreeing to close the deal for its original $44bn, he erratically dispensed of Twitter management and then more than half of its 7,500-person workforce. Soon after, Musk warned that Twitter was losing $4 million a day and that the company might have to file for bankruptcy. In the contrary, by Arnault keeping a cool head during times of struggle, and not choosing rash decisions like halving employee numbers, he has been able to find success in Tiffany & Co. It brought $6 billion of additional sales for LVMH in 2021, generating the most revenue and becoming the group’s second largest brand.

Overall, the Twitter deal was arguably a self-inflicted disaster for Elon Musk. General partner at Manhattan Venture Partners, Andrea Walne, claimed “No one thinks the company should be valued at $44 billion”. Furthermore, side effects of the deal included damage to the Tesla stock, which has now fallen by more than $700bn. This is due to investor fears over Musk becoming too distracted and his controversial decision to sell 19.5m shares, in order to help finance the acquisition.. Musk's poor judgment and impulsive nature in dealmaking has ultimately cost him billions, dethroning him of world’s richest man’ status and forcing him to now settle for a measly net worth of just over $130bn.

In stark contrast, Tiffany’s acquisition deal has turned into a great success. Arnault called bringing Tiffany into LVMH "the highlight of the year" and boasted that if Tiffany were still a public company, its share price would be double what LVMH paid. The shrewd dealmaker has now seen his fortune reach over $180 billion after further adding to LVMH’s luxury-brand superpower status.

It remains unclear as to whether the drastic changes to Twitter’s business model, such as $8 paid verification, can revive the company back to its former glory.

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