What's going on?

No more Mr. Nice Luxury Conglomerate: LVMH announced on Friday that it�d agreed to up its stake in Italian luxury shoemaker Tod�s.

What does this mean?

It�s par for the course for the world�s biggest luxury companies to buy stakes in smaller rivals, if not acquire them outright. And LVMH is no exception: in recent years it�s partnered with Stella McCartney and Rihanna, as well as buying out fashion brand Christian Dior and � after some second thoughts � American jeweler Tiffany�s.

And now for the low, low price of $90 million, LVMH will increase its ownership of Tod�s from 3% to 10%. That won�t just allow it to benefit when the Italian company does well: it�ll put it in prime position to buy the whole company down the line (tweet this). See, unlike old-school industrial conglomerates whose various businesses didn�t cross over much, LVMH specifically wants that overlap. That way, it�ll drive �synergies� � i.e. remove duplicate costs across marketing and distribution � and boost its profit.

Why should I care?

For markets: LVMH could be tempted to spend more.

Investors took it as a good sign when luxury brands Herm�s and Pernod Ricard announced stronger-than-expected sales early last week, and they rushed to buy up shares of the industry�s other companies. But they might�ve been too hasty: Moncler�s results on Friday were �only� in line with expectations, and the skiwear brand�s stock fell 4% � a drop some analysts think might be enough to tempt LVMH to dig deep again�

Zooming out: Luxury conglomerates are the new private equity firms.

One way to look at LVMH is as a sector-focused private equity firm, taking over companies and setting them up for success. If it�s looking to make US school buses look chic, though, it�s been beaten to the punch by a generalist private equity firm: Sweden�s EQT � having just closed a near-$20 billion fund � agreed to buy FirstGroup�s US school bus business for almost $5 billion on Friday.