(FORTUNE Magazine) – FRIENDS SAY Bernard Arnault is deeply in love with luxury goods. The 39-year- old French entrepreneur disputes that. ''You fall in love for inexplicable reasons,'' he says. ''This is completely rational. Nothing makes money like deluxe brands.'' Arnault is betting the chateau on that notion. By taking control in 1988 of Moet Hennessy Louis Vuitton, he became the world's preeminent purveyor of luxury goods, including Moet & Chandon and Dom Perignon Champagnes, Hennessy cognac, Louis Vuitton luggage, Christian Dior and Givenchy clothes and perfumes, and Christian Lacroix fashions. ''This,'' he says triumphantly, ''is one of the world's most beautiful companies.'' He got his chance when an earlier merger of Moet-Hennessy and Louis Vuitton began breaking apart. The two controlling families disagreed on how to fend off raiders. The Moet family offered British brewer Guinness a 20% stake. To % fight back, the Vuittons brought in Arnault. What they didn't know was that Arnault had long had his eye on their company and had been buying shares since the October crash. Once an insider, Arnault switched sides. With Guinness he formed a holding company, which he controls, that owns 38% of Moet Hennessy Louis Vuitton. Born to bourgeois comfort near Lille in northern France, Arnault joined the family construction company after graduating from the Ecole Polytechnique, France's prestigious engineering school. Weary of puny profits from putting up warehouses and factories, Arnault moved the company into the lucrative new niche of building time-sharing vacation complexes on the Riviera. When the Socialists came to power in 1981, Arnault took off for the U.S. with his wife and two young children. He prospered developing condominiums in Palm Beach -- and got an intensive course in American management methods. Says he: ''In France, business is fraught with diplomacy and politics. In the U.S. what counts is profits.'' When the Socialists switched to a more conservative economic course in 1983, Arnault returned to France. Back home, he persuaded the government to sell him the bankrupt Willot textile empire at a bargain price. The hodgepodge of losers ranged from retail stores to a diaper company. What Arnault wanted most was couturier Christian Dior, which he considered the group's overlooked gem. Reorganizing the company, Arnault fired more than 8,000 employees -- including 90 at headquarters. ''All they did was go out to lunch and spend money,'' he says. He sold off much of the revamped textile business in 1987 for more than $200 million and concentrated on Dior. Arnault is cool to subordinates. One manager finally screwed up the courage to ask the boss to lunch after working for him for several years. ''Really?'' replied Arnault. ''Do we have anything to say to each other?'' Slim and elegant, graced with long, delicate fingers, he once dreamed of being a concert pianist. He continues to practice religiously. This year he's learning the Kreisleriana by Robert Schumann. But for all his appreciation of music and fashion, the beauty he seems to like most is an artful deal.