The Magnificent Seven, Financial Times The Business

On Monday, in New York, seven paintings will come to the market for auction. In itself. this may not seem particularly remarkable, but these works, from the collection of Heinz Berggruen, Picasso's dealer and friend, are not any old paintings: five are Cézannes the other two Van Goghs. Their combined value. according to conservative estimates. could be as much as $100m (£69.4m).

But the truly astonishing thing is that this particular sale has nothing to do with Christie's or Sotheby's. A powerful new player in the international auction business has arrived to give those two market leaders a run for their money.

Phillips, de Pury & Luxembourg - wholly owned by luxury goods group LVMH — was formed in January a merger of the Geneva-based art dealer, de Pury & Luxembourg, and the international auction house, Phillips. Founded in 1796, Phillips has counted Napoleon and Beau Brummell among its clients but long been overshadowed by Christie's and Sotheby's. which between them control 95 per cent of the estimated $5bn worldwide art auction market. Monday's sale represents a fantastic opportunity for the new house to establish itself as a significant force.

“The sale has huge importance for us," says Lord Powell of Bayswater, chairman of LVMH (UK) and a former political adviser to Margaret Thatcher and John Major. "The scale and the world," she says. Luxembourg went to the Hebrew Reali School in Haifa, studied history of art at Hebrew University of Jerusalem and started her own museum in Jerusalem when she was 23. She was one of the founding members of the Diaspora Museum in Tel Aviv, created the Jewish Museum in Vienna and started Sothebys in Israel.

"l am incredibly lucky to have her as a partner." de Pury says. They are able to agree on "the difference a fabulous of art and a merely good one". Which Luxembourg describes as the essence of their friendship.

"They are on the same mental wavelength." says Lord Powell. "You can speak to either of them: it's almost like twins. with one starting the sentence and the other one finishing it." Olivier Berggruen, who has worked with both describes Luxembourg as “more earthy, more of businesswoman, whereas Simon is strong on the art side. a bit of a dreamer, full of ideas which are not necessarily purely commercial.”

Their lives are on the always on the move, which has had an impact on their personal lives. De Pury is separated from his wife, with whom he has four grown-up children. Luxemembourg tries to see her husband Isaac, an Israeli architect living in Tel Aviv, at least every second week; on the day we meet her, her 21 year old daughter Alma had just been offered a place at London’s Courtauld Institute of Art.

De Pury, 50, and Luxembourg, 51, have wasted no time in putting together a new team, recruited mostly from Sotheby's. They poached jewellery expert John Block, vice chairnan of Sotheby's North America, to head their US operations; Block brought a team with him. LVMH has bought France's biggest auction house, Etude Tajan, which will also serve as the new company's Paris base.

Meanwhile, staff from de Pury & Luxembourg - six experts. based in Geneva and Zurich — will work on the private-client side under the de Pury & Luxembourg brand. Phillips, with approximately 650 employees based in New York and London will take care of the auction business.

De Pury and Luxembourg themselves haw accrued many more management responsibilities. and may come to miss their independence: "It is a marriage of two different powers and different activities," Luxembourg says, “but I think it can enhance both sides. We can give our clients better terms within the group.”

How the various corporate cultures will work together under the umbrella of LVMH remains to be seen. "It all depends on Arnault," says Anna Somers Cocks, editor of The Art Newspaper. "Phillips is now part of a complex network of investments— if something goes badly wrong in another part of the empire, it can have a knock-on effect." De Pury acknowledges that the decision to merge was a difficult one, but that as stakeholders and co-owners of the business — the terms are not disclosed — there was "a real incentive to make it work"

Certainly they seem to be in tandem with Arnault on their vision for the company. They will still focus on art market issues and client contact, and have a strong management team supporting their efforts. They will ensure excellence and discretion, the latter the most crucial ingredient to their future success. “Discretion is vital to the existence of our future business,” Luxembourg says. "Even when we were a team of six, we did not share details of private deals: the only people who knew were the people involved."

Being in tune with a younger generation is part of their plan. "The clients of today are not the same the clients of yesterday; they are intelligent, they do market research," Luxembourg says. "They have assistant curators, they look on artnet.com, they look at prices. They don't want stories., they want the facts, and you have to convince them with knowledge."

To cover all their bases, Lord Powell has put together a high-powered and prominent new advisory board. The most recent additions to the board are Francesca von Habsburg, founder of Arch, a foundation that protects cultural heritage, and Gloria von Thurn und Taxis, widow of one of Germany’s richest princes, Johannes von Thurn und Taxis. Habsburg, 40, is one of the heirs to the Thyssen collection owned by her father Baron Heini Thyssen-Bornemisza. She believes that companies that make a profit from the arts should give something back: “I'd walk out if Phillips didn't share some of that. The new generation of collectors may spend billions, but they have a much clearer view of right and wrong. They are interested in a company's policy on a whole range of moral, conservation and environmental issues.”

The new board will help bring in the punters, whether to the New York sale or the June 10 opening of the de Pury & Luxembourg gallery in Zurich, which will deal in and show modern and contemporary art. The gallery’s director, Andrea Caratsch, found the space and persuaded de Pury and Luxembourg to add it to their portfolio.

"It is difficult to have profitable gallery,” Caratsch admits, "but we like nothing more than to visit artists in their studios. You also gain profile by moving into the primary market, investing and dealing in contemporary artists." The Zurich gallery’s first show will be the crowd-grabbing Helmut Newton’s Sex and Landscapes.

It will be tough loosen the firm grip the two main auction houses have had on collecting. Financial markets worldwide are experiencing a sharp downturn, but Caratsch points out that it affects mostly the contemporary art market for works since 1990, which includes younger collectors who made their money in stocks. "People who are counting on their bonuses will spend less. But in the modern market and in this sale we won’t be influenced by the current climate."

Phillips also benefits from Arnault’s deep pockets, and the after-effects of the price-fixing scandal that rocked the duopoly of Sotheby’s and Christie's last year. Lord Powell wants to meet them head on: "l think we're going to beat them on May 7. I will be very surprised if they will match us."

The new company’s multifaceted aspect is compelling but risky, and the jury is out on whether it will succeed.

"It is very difficult to do all these things at the same time — it's like doing three different businesses simultaneously, comments Ronald Lauder, chairman of Estée Lauder International and a leading collector of modern and contemporary art. "I admire them for trying it, but anyone who thinks clients don't regard Sotheby's and Christie’s as great companies any more is wrong."