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World Leading Conglomerates Built on Mergers & Acquisitions
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In the business world, the term 'conglomerate' describes a corporate group comprising two or more business entities involved in either diverse or similar industries. Typically, a conglomerate is a large, multi-industry company created through mergers and acquisitions (M&A). This article aims to illuminate the paths taken by several of the world's leading conglomerates, focusing particularly on their mergers & acquisitions journeys.
1. LVMH
As the largest luxury group in the world, LVMH has an acquisition strategy centered on diversifying its brand portfolio while upholding the standards of luxury and exclusivity. LVMH's roughly 80 brands cover a broad spectrum of luxury segments, including fashion and leather goods, perfumes and cosmetics, watches and jewelry, wines and spirits, and selective retailing.
By acquiring companies that cater to diverse consumer tastes, LVMH diversifies its offerings and attracts a broader customer base. LVMH also leverages its existing distribution channels, both online and offline, to often quickly enhance the margins of acquired businesses. This diversification not only diminishes the risks associated with relying on a single market segment but also expands the conglomerate's geographical footprint. Additionally, the synergies from these acquisitions mean that businesses often hold greater value under the LVMH umbrella, positioning LVMH advantageously for conducting acquisitions.
Two of LVMH's most notable acquisitions are Bulgari, which was bought for $5.2 billion in 2011, and the iconic American jeweler, Tiffany & Co., purchased in 2021 for $15.8 billion — marking two of the largest acquisitions in the company's history.
Further reading: The Luxury Empire: LVMH's Most Notable Acquisitions Since Inception
2. The Walt Disney Company
From its beginnings as an animation studio in 1923, Disney has evolved into one of the world's leading companies within media and entertainment. Disney's M&A strategy has been instrumental in this transformation, with key acquisitions such as Pixar, Marvel, and 21st Century Fox during the last two decades.
Disney's largest acquisition to date is 21st Century Fox, which was acquired in 2019 for approximately $71 billion. Through this move, Disney added many iconic film and television franchises to its portfolio, such as Avatar, X-Men, The Simpsons, and more.
Further reading: Disney's Most Notable Acquisitions Since Inception
3. Take-Two Interactive
While the American video game publisher Take-Two Interactive may be less known to some compared to its peers, its execution of acquisitions over the past two decades has been world-class and crucial for expanding its gaming universe. The acquisition of Rockstar Games, primarily known for 'Grand Theft Auto' and 'Red Dead Redemption', was a game-changer.
Further reading: Take-Two Interactive: Rising to Power Through Strategic Acquisitions
4. Danaher Corporation
Danaher serves as an exemplary case study in capital allocation and successful acquisitions. Since the early 1990s, Danaher's management team has turned a group of underperforming industrial manufacturing companies into a global life science and diagnostics powerhouse.
Since the start of this chart, Danaher's stock has returned over 35,000% for its shareholders – excluding dividends. This infographic visualizes some of Danaher's most notable acquisitions and spin-offs.
Further reading: Danaher's Business System and Acquisition History
5. Pernod Ricard
In the spirits industry, Pernod Ricard has made a name for itself through strategic M&A activities. A significant move in its acquisition strategy was the purchase of Seagram's in 2001. Its growth continued with acquisitions such as Absolut Vodka in 2008, further solidifying its position in the global spirits market.
Today, Pernod Ricard owns one of the largest wine & spirits brand portfolios in the world, including names like Malibu, Perrier-Jouët, and Beefeater. Here are Pernod Ricard's most notable acquisitions over the last four decades.
Further reading: Pernod Ricard's Acquisition Journey
6. Estée Lauder
A force to be reckoned within the cosmetics industry is Estée Lauder, whose growth in part can be attributed to its strategic acquisitions. The company broadened its audience with the purchase of MAC Cosmetics in 1998 and later embraced the rise of boutique brands by acquiring Jo Malone in 1999 and Too Faced in 2016. As of 2023, Estée Lauder was valued at $34 billion which makes it one of the largest companies in the world within cosmetics and beauty.
"Our portfolio strategy includes growing existing brands and discovering new high-potential acquisitions that align with our values and offer a long-term outlook for success. To maintain our leadership position, we nurture and preserve each brand’s distinctive identity and purpose. At the same time, we leverage our global distribution, creative resources and operational expertise across all our brands." – Fabrizio Freda, President & CEO of Estée Lauder
Further reading: EstéeLauder: The Beauty of Strategic Acquisitions
7. EssilorLuxottica
In the competitive landscape of eyewear and optics, EssilorLuxottica stands out as a leading global entity. Known for its extensive range of brands including Ray-Ban and Oakley, EssilorLuxottica's growth is significantly marked by its strategic acquisitions.
Further reading; EssilorLuxottica: Global Dominance Through Strategic Acquisitions
8. L’Oréal
In the beauty and cosmetics industry, L’Oréal has established itself as a global leader, partly through its M&A strategy. A pivotal moment in its expansion was the acquisition of Maybelline in 1996, which significantly enhanced its presence in the cosmetics market.
Over the years, L’Oréal has continued to broaden its influence by acquiring a variety of companies across different beauty segments, including the purchase of The Body Shop in 2006, which expanded its reach in the ethical skincare and cosmetics market. Another notable acquisition was of Yves Saint Laurent Beauté in 2008, which solidified L’Oréal's stance in the beauty segment.
Today, L’Oréal boasts one of the most diverse and prestigious portfolios in the beauty industry, featuring renowned brands such as Lancôme, Giorgio Armani Beauty, and Urban Decay. Here's an overview of L’Oréal's most impactful acquisitions throughout the past 35 years.
Further reading: L'Oréal: The Beauty of Intangibles
9. Richemont
The luxury group Richemont, led by the South African billionaire business magnate Johann Rupert, have built their conglomerate partly through strategic acquisitions. Rupert's vision for Richemont involved acquiring established luxury brands with a rich heritage. Significant acquisitions included Cartier in 1993, Vacheron Constantin in 1996, and Van Cleef & Arpels in 1999.
As of 2023, Richemont's revenue was primarily generated from Jewelry Maisons (67%), with Cartier and Van Cleef & Arpels as major contributors. Specialist Watchmakers contribute 20% with maisons such as IWC Schaffhausen and A. Lange & Söhne, and the remaining 13% comes from Fashion & Accessories brands such as Chloé and Delvaux.
Further reading: The Story of Richemont: From Tobacco to Luxury Dominance
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