By Shawn Tully

(FORTUNE Magazine) – AN ELEGANT STRATEGY BASED ON CLASSY BRANDS One of the new band of tough, U.S.-style European managers, Bernard Arnault, 39, revived a bankrupt textile company, then built a luxury-goods empire that includes Moet & Chandon and Dom Perignon champagne, Christian Dior and Givenchy clothes and perfume, Hennessy cognac, and Louis Vuitton luggage. Says Arnault: ''I always control the stock -- and I always have the last word.'' After graduating from the prestigious Ecole Polytechnique, Arnault prospered building vacation homes on the French Riviera. When the Socialists came to power in 1981, he left France for America with his wife and two young children. ''France was dead,'' he says. He duplicated his Riviera success by developing condominiums in Palm Beach and other wealthy communities. The Socialists' right turn in 1984 lured him back, but not before he picked up some American-style grit. Arnault, then just 35 and unknown, persuaded the Socialists to let him buy control of the bankrupt textile empire formed by the Willot family. After restoring it to profitability, he sold the textile manufacturing unit in order to lavish attention on the group's overlooked gem, couturier Christian Dior. For Arnault the quest for class is nothing new. Slim and patrician, he once dreamed of becoming a concert pianist, and can still play six of Chopin's etudes by heart. Another hobby is reading the works of 19th-century Romantic novelists such as Stendhal, whose heroes pride themselves on achieving total mastery over their emotions. He affects the same cool approach to life. An assistant recalls that a visit with the boss to a St.-Tropez disco was more like a factory tour. Arnault had barely squeezed through the door when he signaled that it was time to leave: ''I think we've checked out the main features.'' Arnault's strategy is elegantly simple. ''Deluxe brands command big margins because they're so hard to compete with,'' he says. ''Anybody can make textiles. But there's only one Dom Perignon.'' Last summer Dom Perignon and half a dozen other classy brands fell into Arnault's lap. Moet-Hennessy and Louis Vuitton had merged in 1987. Then the two sides argued over how to best fend off a takeover.

The Moet camp wanted to sell a big stake to British brewer Guinness. The Vuitton family balked and found a white knight of its own, Bernard Arnault. Adroitly switching sides, Arnault made a deal with Guinness, forming a holding company that now owns 38% of Moet Hennessy Louis Vuitton. Arnault owns 60% of the holding company.

A BANKER TO COUNT ON Count Albrecht Matuschka, 44, is leading a one-man crusade to shake up stodgy West German industry. A champion of venture capital, acquisitions, and restructuring, he has built privately owned TRV-Group Matuschka into a major financial services company. In 1983 he and American financier Peter Brooke, along with Siemens and other companies, raised $100 million to start the first German venture capital firm, Techno Venture Management. Among its boldest moves is ES2, a trans-European semiconductor manufacturer that is expected to nearly double annual sales this year, up from $4.3 million. Matuschka beats the odds. Says he: ''The mortality rate for new ventures here is higher than the mortality rate of infants in the 1800s.'' Born in Germany of an old Bohemian family, Matuschka had polio as a child and walks with two canes. He learned finance as an apprentice of one of the legends of German banking, Eric Warburg. A garrulous extrovert, Matuschka hatched so many offbeat ideas at Warburg's Hamburg firm that colleagues called him the court jester. In 1970 he launched TRV to manage money for other aristocratic families. The firm now has a global network that does everything from money management to investment banking. The jester is getting the last laugh.

ITALY'S HARD CHARGER NEVER LOOKS BACK Italians have been the most aggressive dealmakers, and the champ among them is Carlo De Benedetti. In the past decade, he has built an empire stretching from Sweden to Spain, including Italian computer producer Olivetti and Yves Saint Laurent, the French fashion house. By crossing borders to revive ailing companies, De Benedetti, 54, has done more than any other businessman to quash protectionism and rally European industry for its rendezvous with 1992. De Benedetti's reach sometimes exceeds his grasp. This year he lost out to French investment bank Cie Financiere de Suez in a bitter fight for the ''grande dame'' of Belgian industry, Societe Generale de Belgique. After four years of trying, he abandoned a scheme to turn Buitoni into a European food giant. He sold the pastamaker to Nestle. But setbacks have neither slowed him down nor dented his hubris. De Benedetti's latest coup was gaining control of Italy's largest publishing company, Mondadori.

A BIG NORTH-SOUTH DEAL None of the pan-European pioneers stands taller than a gangling, goateed Swede named Percy Barnevik. This year Barnevik surmounted not only national borders but also nationalist pride to orchestrate the $4.5 billion merger between Sweden's Asea and Switzerland's Brown Boveri, a deal that created Asea Brown Boveri, the world's largest electrical engineering company (1988 sales: an estimated $18 billion). ''We're setting the example for 1992,'' he says. ''For European industry, there's no turning back.'' Barnevik has also formed joint ventures with Westinghouse to produce $2 billion a year of power-generating and transmission equipment and services. Son of a small-town printer, Barnevik has the owlish look of a history professor. His tie is usually yanked to one side. On the tennis court, he prefers singles to doubles. Quips an aide: ''In doubles, he can't stand the divided responsibility.''

THE PEASANT WHO LIVES LIKE A PRINCE Weathered hands and a thick country accent have earned him the nickname il contadino, the peasant. But farmer's son Raul Gardini is creating a business empire with the guile and panache of a Renaissance prince. In less than a decade, he has built the Ferruzzi group into a chemical and agricultural giant that now ranks as Italy's second-largest private company behind automaker Fiat. Says Gardini: ''I'm just applying the lessons I learned down on the farm.'' Some farm. Trim and tanned, Gardini, 55, runs his domain from a pink terra-cotta palazzo in the Adriatic port of Ravenna. On weekends he unwinds at a splendid palace on the Grand Canal in Venice festooned with Renaissance frescoes. He skippers his racing sloop the way he runs his business -- with military precision. A dropout from the University of Bologna, Gardini took charge of Ferruzzi in 1979 when his father-in-law, Serafino Ferruzzi, died in a plane crash. Gardini quickly steered the family grain-trading firm into food manufacturing, spending more than $2.5 billion since 1980 to buy a host of companies, including the European operations of CPC International, the big U.S. grocery products maker. His boldest stroke came last year when he won control of Italy's fourth-largest industrial company: chemical producer Montedison.