On 7 March 2011, Italian jeweller Bulgari, and French Luxury Group LVMH announced in a joint press release the sale of Bulgari to LVMH.
Whilst shareholders and analysts might have liked the deal, I noticed the media mentioning that the difficulty that Bulgari Chief Executive has had was to convince Italian media why selling out to the French is necessary. The topic that the French are increasingly buying Italian brands is high on the agenda these days in Italy and is damaging the proud “Made in Italy” reputation.
Strong key media messages
I looked at what I believe are strong key messages in interviews about the deal with the Chief Executive Francesco Trapani and summarize these messages as follows:
- Good deal: The deal is financially good and positive for all stakeholders. It guarantees the Long Term future for Bulgari.
- The world is changing: Remaining independent was no longer an option for Bulgari. Like more relatively small scale independent Italian brands, Bulgari faces a more globalised world and is more vulnerable to macroeconomic volatility.
- In Need for Scale & Power: To remain competitive, Bulgari global growth ambitions are to become a stronger brand and a financially healthy and larger company with increased revenues and market shares. This cannot be reached without the global scale and financial power of a partner such as LVMH.
- China: Long term, Bulgari needs scale to be able to benefit from opportunities in fast growing markets like China, increase market share and financial investments to reduce media buying costs and costs of distribution.
- It’s the right time: Bulgari does not wait until it becomes too difficult to compete with large companies like LVMH but joins them.
- Within Italy there is no partner: Since Bulgari was unsuccessful to find a solution within Italy, it turned to French LVMH, which is the perfect partner since it owns a range of Luxury brands and understands best how to nurture and grow brands with respect of the roots and identity of brands, including the fact that Bulgari is a family business.
- Seats on BoD: Bulgari will be entitled to two seats on the Board of Directors of LVMH.
- HQ remains in Rome: The newly combined watches and jewellery division of LVMH will double in size as a result of the deal. Francesco Trapani will join the Executive Committee and head this division and Bulgari’s HQ will remain in Rome. Further acquisitions are not ruled out.
The deal seems to have been communicated well, but I’m not Italian. How Italian Will Bulgari Remain is obviously a sensitive topic for the Italians. Italian iconic brands are part of Italy’s DNA. It should not have been a surprise that Italian media therefore focussed on the disappointment that the Italian company sold out to the French.
I wonder therefore if the Chief Executive has spent enough time talking about LVMH’s respect for the Bulgari family culture and what Bulgari has agreed with LVMH about the respect for the Italian identity of the brand. Has the Chief Executive made it clear enough what the synergies will be and has he explained where possible changes would be expected for the better? How will these changes benefit the quality, production, media buying or distribution of products? Will there be lay-offs and if and how will consumers notice any change?
What the Italians might have missed is evidence for the promised respect for culture and identity. For Italian media, this should have been a top key message. They want to hear how important the Italian image is to the brand and how LVMH will nurture this. Francesco Trapani did try to explain that the deal should not be seen as a takeover but the message might not have been strong enough since the financial facts are clear about this.
1. Issues List: In Merger & Acquisition deals, spokespersons like the Chief Executive are usually well prepared with a comprehensive messages document and Q&A which helps explaining the rationale behind the deal. In the preparation phase, it’s however also important to take enough time to list all possible issues and discuss how best to manage them.
2. List Key Messages and Proofpoints: What completes your list of key messages is a list of proof points or evidence to sustain your key messages.
3. Mediatraining: The best way to prepare for a big announcement is to organise a media training session in which you can practise your key messages and build the proof points.
4. Know Your Audience: Make sure you mention all your key messages in every interview and stress some messages with examples more than others depending on readership profile.
To stay with the Bulgari case, more evidence that pushes back uncertainty and speculation amongst the Italians is necessary. It shows that both the Bulgari and the LVMH Chief Executives understand the sensitivity and find it important to discuss as part of the deal. It also shows that both Chief Executives know the details about such an important topic.
If there are any Italians amongst my readers or others who want to leave a comment, let me know what you think.