Are Some of Your Favorite Watch Brands About to Merge?

The watch world has collectively been freaking out over the past week upon hearing the news that the head of LVMH, Bernard Arnault, had purchased a “private stake” in rival Richemont.

There’s still a lot we don’t know about the deal, which was first reported by Bloomberg, including the size of Arnault’s stake (though it’s said to be “small”), when exactly he purchased it, what influence he may be able to exert over Richemont and what this may mean for the future of watch industry.

So I’m going to do my best to sort it all out below.

Who Are LVMH and Richemont?

The Swiss watch industry is dominated by large conglomerates, with four entities accounting for over 75 percent of the market and 31 of the top 50 best-selling brands.

At the top is Rolex Group, made up of Rolex and Tudor, which accounted for 31.9 percent of the market in 2023. Next is Swatch Group at 19.4 percent, which includes not only its namesake but top-10 brands such as Omega, Longines and Tissot.

As it stands now, Richemont and LVMH represent the third and fourth largest Swiss watch conglomerates, respectively. Richemont is considerably larger, accounting for 18.7 percent of the market, and includes Cartier, the second best-selling Swiss brand, as its crown jewel.

Photo by Zen Love for Gear Patrol

Richemont also owns, in order of revenue: Vacheron Constantin, IWC, Jaeger-LeCoultre, Panerai, Van Cleef & Arpels, Piaget, A. Lange & Söhne, Montblanc, Baume et Mercier, Roger Dubuis and Ralph Lauren Watches.

LVMH accounts for just 5.8 percent of the market, making it less than a third the size of Richemont, but it has shown an interest in aggressively expanding its influence on the industry.

It added two new brands to its roster this year in the reborn Gérald Genta and Daniel Roth names, while also elevating Louis Vuitton to a serious watch brand. The rest of its portfolio is filled with recognizable names: TAG Heuer, Hublot, Zenith, Bulgari and Tiffany & Co., which is less of a player in the watch space currently but certainly has potential.

Photo by Johnny Brayson for Gear Patrol

Are LVMH and Richemont Merging?

Richemont is much larger than LVMH in the watch space, but watches are its main meal ticket. LVMH, meanwhile, is a massive conglomerate specializing in every kind of luxury good, with watches being a relatively small piece of the pie, and it has nearly five times the revenue of Richemont. In other words, it’s a much larger company overall.

Arnault is also one of the richest people on the planet. He briefly led the rankings earlier this year and currently sits in third place behind Elon Musk and Jeff Bezos, according to Forbes. So if the guy wanted to outright buy and absorb Richemont, he could probably do it.

But right now, there’s simply no evidence to indicate that a merger is in the works. Arnault’s stake in Richemont is said to be “small,” and it’s entirely possible — perhaps even likely — that he simply purchased it as a personal investment because he likes the direction Richemont is going.

Photo by Zen Love for Gear Patrol

Arnault has spoken highly of Richemont chairman Johann Rupert in the past, calling him an “outstanding leader” earlier this year, according to Vogue.

What Would Happen If LVMH and Richemont Merged?

Even though I don’t expect it to, what would actually happen if LVMH were to absorb Richemont?

Well, right off the bat the new entity would be the second largest watch conglomerate, dwarfing Swatch Group with a 24.5-percent market share and coming closer to Rolex’s dominance than any rival in recent memory.

But would this be good or bad for consumers? It’s impossible to say for sure, but the answer is probably a little of both.

Watch enthusiasts tend to prefer brands maintaining their independence, for a variety of reasons. For one, it’s easier for a brand to maintain its unique identity if it’s not sharing movements and technology with other brands.

Photo by Johnny Brayson for Gear Patrol

For example, since Richemont owns movement manufacturer Valfleurier, the same movement produced by the manufacturer will sometimes pop up in watches from the likes of IWC, Panerai and Baume et Mercier — all at different price points. On the LVMH side, brands share certain technologies, with Zenith borrowing some bracelet tech from sister brand Hublot.

Secondly, an independent brand has more freedom to compete at whatever price point and market it feels is necessary. Among the big conglomerates, there exists a hierarchical structure that aims to minimize competition between brands under the same corporate umbrella.

TAG Heuer and Zenith, for instance, may have been direct competitors in their pre-LVMH mid-century heyday as chronograph manufacturers, but today they’re aimed at different markets and income levels and don’t really compete directly with one another.

Were all the brands of LVMH and Richemont to come under the same roof, it’s possible we could see some increased sharing of technology and movements, which would further muddy the differences between these brands.

We could also see a shuffling in the hierarchy of these brands. Perhaps IWC would move downmarket to not overlap with Zenith, or maybe Hublot moves further upmarket to create more distance between it and Panerai.

Photo by Johnny Brayson for Gear Patrol

This could be good for consumers if certain brands suddenly become cheaper, or it could be bad if the brand you’ve had your eye on suddenly moves up and out of your price range.

Finally, it’s possible some brands wouldn’t even survive the merger. If it’s deemed that underperforming brands aren’t pulling their weight, it may be an easier call to simply let them fall by the wayside than to keep propping them up. After all, with the portfolios of both LVMH and Richemont to draw from, there’s plenty more where that came from.

What Happens Next?

In the short term? Arnault gets a little richer, I guess. Richemont shares jumped upon the news of his stake. But outside of that, I don’t expect anything major to happen any time soon.

It’s possible Arnault is getting closer to the company in an attempt to both exert influence and gain an opportunity to siphon off any specific subsidiaries that draw his interest — such as Cartier or Vacheron — but that’s just pure speculation.

For now, I’m just going to enjoy all of the excellent watches produced by both LVMH and Richemont and not worry too much about the stock portfolios of mega-billionaires.

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