OCTOBER 4, 1999
LVMH invests in Prost
AS we predicted in June, Alain Prost has formed an alliance with Bernard Arnault, the chairman and chief executive of the Louis Vuitton Moet Hennessy empire. Arnault, who is known as one of France's most notorious corporate raider, has built up an impressive empire of luxury goods companies in the last 20 years. His $7.5bn empire now includes most of the premium champagne houses, fashion names such as Christian Dior and Givenchy and other luxury firms such as TAG Heuer watches. Arnault has also made considerable investment in the Internet in recent months.
The deal with Prost involves LVMH's investment capital subsidiary LV Capital, which has been highly active since it was taken over in July by Daniel Piette. He has bought stakes in recent weeks in US clothing company Gant and has purchased the famous British shirt making firm of Thomas Pink.
The Prost deal is based on merchandising with the intention being for LV Capital and Prost Development (the holding company of Prost Grand Prix) to set up a company which will produce and sell Prost-branded products for worldwide distribution. In addition LV Capital has bought a 10% shareholding in Prost Development in a deal which is probably worth around $15m. It is unclear, however, whether this money will be invested in Prost Grand Prix or whether it will go directly to Alain Prost. The deal should also mean that Prost will gain regular revenue in the future from the merchandising operations.
The deal is the first significant move since the team began working with the investment banking company Credit╩Suisse╩First╩Boston although there is undoubtedly a link between the deal and Prost advisor Julian Jakobi, who was the man who created the hugely-successful Ayrton Senna marketing empire and then went on to help build up Jacques Villeneuve's image.
Prost is currently working hard to find money in the United States of America and has hosted several top US businessmen at recent races. These are believed to include one or two Internet millionaires.
"We aim to combine the Prost name with our considerable brand development expertise, extensive knowledge of retail and global distribution network to achieve considerable success with Prost branded products." said LV Capital's Daniel Piette.
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