Why investors should be troubled by two French corporate dramas

At first glance French luxury empire LVMH and media group Lagardère have little in common. The first is the world leader in its sector; the latter a shell of its former self.

Yet the drama unfolding at both companies shows how French president Emmanuel Macron’s aim to make the country more attractive to international investors has some way to go.

Take Bernard Arnault, LVMH’s controlling shareholder and Europe’s richest man. He has buyer’s remorse and wants to recut the $16.6bn deal LVMH struck to buy US jeweller Tiffany last November. With the coronavirus crisis upending the luxury sector, LVMH has been trying to find chinks in an ironclad merger agreement.

Earlier this month, the “wolf in cashmere” pulled a rabbit out of his hat. LVMH declared that the French foreign minister, Jean-Yves Le Drian, had written a letter to the Paris-based company asking it to delay the closing of the acquisition until January 6.

The apparent reason? To support France in its trade battle against US president Donald Trump, who has vowed to slap customs duties by early January on French industries, including luxury goods, in retaliation for France adopting a digital services tax. The unprecedented letter called upon LVMH “to take part in our country’s efforts to defend its national…

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