Lagardère: Anatomy of a French heir’s fall

The conclusion of the failed succession at Lagardère was always going to be a sad affair.

The French group’s decline under Arnaud Lagardère, son of founder Jean-Luc, has been chronicled in the press for two decades. This week “the heir”, as he is called in Paris business circles, was placed under formal investigation by financial prosecutors, forcing him to resign from his role as chair and chief executive.

The 63-year-old is accused of dissemination of false information, vote buying, misuse of corporate assets and abuse of power — among a long list of preliminary charges that he denies and intends to fight. It is the finale of a slow descent into corporate oblivion.

The Lagardère succession is a cautionary tale for any entrepreneur seeking to keep their company under family control. KPMG estimates that more than $15tn will be handed on by 2030 in “one of the largest ever intergenerational transfers of wealth” — $3.2tn of which is in Europe.

The Lagardère son’s downfall resonates particularly in France, where the mighty wealth creators of the 1990s are all in their seventies or eighties.

Bernard Arnault, 75, is preparing for his own succession at LVMH, with four of his five children now on the board of the luxury behemoth. Vincent Bolloré, 72, has shaped Vivendi to lure two of his children, Yannick and Cyrille, into picking up the baton. François Pinault, 87, who handed the reins of what is now Kering to his son François-Henri in 2005, is placing his grandson François on the board of auction house Christie’s.

They all had front-row seats to the rise and fall of the Lagardère empire. Jean-Luc, an engineer with no family money but flair and charm, showed them the way, becoming one of France’s most influential entrepreneurs in the 1990s until his sudden death in 2003 at the age of 75.

He left behind a media-to-aerospace empire that included a stake in Airbus — which his son then set out to shrink and rip apart. Arnaud showed little business acumen and seemed more inclined to spend his time with his supermodel wife or at tennis tournaments than at group seminars or board meetings.

Unlike Arnault or Bolloré, the elder Lagardère only had a single heir in Arnaud. After his wife left the family home, he fought for and secured sole custody of his then teenage son — a rare outcome at the time. Not a present father, he spoiled his son with riches. When the entrepreneur died, “Junior”, as Arnaud was often called in the company, was little prepared.

For years Lagardère’s quirky French governance — the commandite — allowed the heir to control and run the company with a 7 per cent stake. Over time, however, after poor choices of disposals (including the stake in Airbus) and investments (Arnaud lost hundreds of millions of euros in sports ventures), it became a drag on the company’s valuation and the only protection against predators.

“Over my dead body” was once Arnaud Lagardère’s response, in a moment of lucidity, to a question over whether he would ever envisage ditching the commandite for a normal structure reflecting his economic stake in the company.

All the bets were on Bolloré, a corporate raider who loves a good lawsuit to crush enemies, to throw in a legal challenge. But it was hedge fund Amber Capital that initiated the battle in 2016 by buying a stake and launching a lengthy campaign to place its men on the board.

Sensing blood, Bolloré did eventually join the party, using his media group Vivendi to build up a stake in Lagardère. Bernard Arnault, a close friend of Jean-Luc Lagardère, came to Arnaud’s rescue by injecting funds into the Lagardère parent company in 2020. But Vivendi, teaming up with Amber, convinced Arnaud Lagardère to get rid of the commandite in 2021. This paved the way for Vivendi to take over control two years later — a prelude to Arnaud’s final exit this week.

There will be many lessons drawn from the debacle. But one stands out that will hang over the wave of family-owned groups that are about to undergo their delicate successions in France: the laws of capitalism are always more powerful than legal tricks and long-time loyalties.

anne-sylvaine.chassany@ft.com