Why Would LVMH Want to Buy Riva?

Nov 17

Arnault and LVMH rumored to target Riva. Let’s figure out why.

While the headline can come as a shock, this isn’t the first time LVMH has dove into blue seas.

During the 2008 financial crisis, LVMH (LVMH Moët Hennessy Louis Vuitton - website) – through its subsidiaries – purchased two yachting entities, Princess Yachts International and the Royal Van Lent shipyard. These deals were done at $400 million and €400 million, respectively, and have aged well for the world’s luxury leader. In 2023, LVMH sold its holding in Princess to a US-based private equity firm, while it still holds Royal Van Lent. If Royal Van Lent doesn’t ring a bell, you may recognize it easier as the builder of Feadship. The Dutch shipyard manufacturers some of the world’s largest and most luxurious super yachts, including m/y Symphony (333’, 2015) owned by LVMH CEO Bernard Arnault.

Everything I’ve read on LVMH’s interest in Riva remains at rumor-level, although all the reports read with the same voice, so I suspect a press release was distributed. The rumor mill started just a few days prior to the release of Ferretti’s Q3 earnings. Coincidence? I don’t think so.

Riva is owned by the Ferretti Group (website), who also owns Wally, Pershing, Custom Line, CRN, Itama, and Ferretti Yachts. LVMH’s rumored interest started just a few days prior to the release of Ferrettis Q3 earnings, which flaunted a 3.8% increase in Q3 revenue — from €834m in 2023 to €865m in 2024 — among other positive KPI bumps. While these numbers look good, let’s not forget, shipbuilding is a long fulfillment period. Positive revenues posted in Q3 2024 could be the realization of successful sales in the 2022/2023 cycles. And with LVMH’s history of buying in a downturn, I have to ask, “Why Riva, Why now?”

*Source: Ferretti Group quarterly report (November 2024)*

Ferretti’s Q3 numbers are highlighted by an impressive improvement to 16.0% adjusted EBITDA margin, up 100 basis points from the prior year and a 9.9% drop in order backlog. Both measures highlight improving production efficiency, an attractive trait to buyers. But something deeper in the report caught my eye. The Ferretti Group experienced a 15.8% decline in Q3 Order Intake (when compared to Q3 last year), yet a 53.2% increase in Order Intake of super yachts during the same period. That’s astounding. This bump is likely comprised of Ferretti’s three super yacht brands, Custom Line, CRN and Riva. Riva is the most expensive of the three. Are the other Ferretti brands (Wally, Pershing, Ferretti, Itama) starting to suffer while the super yacht division (led by Riva) is keeping the balance sheet strong?

Ferretti’s American sales operation has experienced rising inventory levels since the post-Covid slow down. I’d hoped the quarterly report would shed light on debt levels for the group, but those weren’t shared. Disappointing.

While we wait to see how inventory levels shake out in the conclusion of 2024, I will continue to seek out Ferretti debt levels. It could shed light on buying opportunities.

With the recent offloading of their holding in Princess, LVMH could have its sights set on the darling of the yachting world. It’s easy for LVMH to see the intangible brand quality Riva brings to the table, but do the financials align with a purchase opportunity?

Does the Ferretti Group’s Q3 earning report help or hurt LVMH’s rumored interest in Riva?

Read the Ferretti Group’s Q3 earnings report here.

About the Author

Reed Nicol is a licensed yacht broker with experience in all corners of the marine industry. He’s worked as an executive and sales director in yacht manufacturing and distribution, has structured commercial charter operations, and designed and executed notable refits. Read more about Reed’s marine journey, his love of helping 1st time boaters and his entrepreneurial spirit here.

Reed Nicol [Licensed FL Yacht Broker #11926]
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