FOR Francois Pinault, being rich without a pedigree is true suffering.
France worships class — where even commuter-train tickets to posh Paris suburbs are sold as first-class or second-class — and a tycoon hasn’t arrived unless he was already “there” in the first place.
Pinault, 63 — France’s biggest self-made billionaire — clawed his way out of his country’s backwoods to become one of its wealthiest businessmen, using politics and iron-fisted wheeling-dealing to get there.
In just a few weeks, he has also changed the face of New York’s two powerful art auction houses, and doesn’t plan to stop there.
Pinault owns Christie’s, which he bought for $1 billion two years ago, and managed to topple the management at his chief rival, Sotheby’s, by blowing the whistle to the Justice Department on alleged past collusion between the two auction houses to fix prices. Federal prosecutors have probed the two houses since 1997. To many business titans here, Pinault’s exploits would make him a role model.
In 40 years, he turned his father’s tiny timber business into a multinational holding group — including powerhouse Artemis SA — that controls finance, media and up-market consumer brands.
But that’s apparently not enough to conquer the tasteful but often cruel world of Paris-centric France. His billions and murky businesses tend to be objects of derision to amuse the elite of Paris, say French observers.
“He’s doesn’t belong to the elite and never will,” said an insider in French business circles. “That isn’t comfortable for him.”
Observers say it’s no surprise that Pinault is aggressively waging his “war of luxury” against his old nemesis from the closed circles of the Parisian upper classes — Paris tycoon Bernard Arnault, 50.
Pinault and Arnault have battled several years across Europe for control of numerous luxury brands — from Gucci to France’s top art auction house — with a mixed score card.
They’re now bringing their guerre du luxe to America for the ultimate showdown — control of high society’s great equalizer everywhere: fine arts. Arnault is said to be talking about buying control of Sotheby’s for more than $500 million, setting up a New York front for the Frenchmen’s rivalry.
“Whenever a company involved in luxury comes on the market, the two of them get into a big fight over it,” said one Paris business source.
Last fall, Pinault managed to wrest control of Gucci away from Arnault after a long, costly battle.
Two weeks ago, Arnault got even by winning another drawn-out fight for France’s most prominent art auction house, Etude Tajan.
Arnault also owns Europe’s No. 3 auction house, Phillips, which he’ll merge with Etude Tajan to block Christie’s in the French market. Auctions in France were a national monopoly for centuries, and only in January became open for the first time to non-French houses such as Christie’s and Sotheby’s.
“Pinault was furious he lost the fight for Etude Tajan,” said a French auction insider.
“If Arnault gets Sotheby’s and also combines it with Etude Tajan, Christie’s wouldn’t be able to compete in France and would get hurt elsewhere in Europe,” he said.
“Pinault will try everything to see that Arnault won’t get Sotheby’s,” the source said.
Pinault is rumored in Paris to be talking with Sotheby’s second-largest shareholder, hedge-fund manager Ron Baron. With Baron’s 23.5 million shares in Pinault’s pocket, plus more stock bought on the open market, Pinault might have enough clout to block Arnault without triggering antitrust concerns, or at least to give his foe fits. Both Pinault and Baron also have been major investors of Vail Resorts in Colorado.
Pinault’s spokeswoman in Paris said the mogul isn’t interested in taking control of Sotheby’s, and declined further comment.
The usually low-key Pinault is coming under more scrutiny for his murky offshore business structure, which the Economist last week said was devised to evade millions in French taxes.
The Economist said the businesses, which are primarily family-controlled, file “persistently … incorrect and misleading information” with regulators here and abroad, and are “ideally suited to avoiding tax in France.” Pinault’s lawyers denied the allegations.
Pinault’s closest friends include French President Jacques Chirac, who personally called on Pinault to buy the prominent center-right newsweekly Le Point to avoid a takeover by the left in 1997.
“If you go up against [Pinault], you have to have very strong friends in government yourself,” said one French source.
Tax authorities “have been soft on him because they aren’t accustomed to such complex offshore structures,” the source said. “We expect a case will be built, but not at this time.”
Pinault also can control what goes on bookshelves, since his FNAC department store chain sells one of every four books bought in French stores.
And he owns a 15 percent stake in France’s dominant TV network, TF1, as well as brands including Yves St. Laurent, Converse sports goods, Sampsonite and Chateau Latour.
He also owns Aurora Life Insurance Co. He recently bought Aoba Life Insurance in Japan, for $220 million, gaining $120 billion in assets and $650 million in revenue.
Colleagues call Pinault and his rival Arnault exact opposites.
“Arnault is from old money and old society, and is very polite and a diplomat in his dealings,” said a business figure who knows both men.
“Pinault will do anything to succeed. He doesn’t care what he says or who he hurts. He’s ruthless, he sacks people with pleasure, which is looked upon very badly in the French business world.
“If Arnault found himself in a position to sack people, he would do it sadly and certainly wouldn’t boast about it the way Pinault does.
“Pinault works with an iron fist — in an iron glove.”