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26 November 2019

LVMH to acquire Tiffany for $16 billion in largest luxury-goods deal ever

The all-cash deal is expected to close in the middle of 2020 and cements a successful streak for LVMH, which is worth about EUR 200 billion ($220 billion) after it's stock price quadrupled during the past eight years.

Bloomberg/Balint Porneczi

LVMH has agreed to acquire Tiffany for more than $16 billion in the largest luxury-goods deal ever, raising the French conglomerate’s profile in jewellery and giving it access to a broader swath of shoppers in the US and Asia, reported Bloomberg.

In a statement, the owner of the Louis Vuitton brand agreed to pay $135 a share for the US jeweller.

LVMH Chairman Bernard Arnault is challenging Cartier owner Richemont for dominance in the global jewellery business. While LVMH’s stable of 75 brands includes Christian Dior fashion and Dom Perignon Champagne, the company hasn’t been as prominent in jewellery as in fashion or cosmetics.

To fuel growth, Europe’s richest person has embraced acquisitions, spending more than $12 billion across 19 deals since the start of 2016.

Yet even with that spree, LVMH has lagged behind Richemont in luxury jewellery, a significant area of growth in emerging markets such as China. LVMH’s last major deal in that area was in 2011, when it acquired the Bulgari brand.

LVMH raised its bid for Tiffany at least twice before coming to an accord, bolstering its offer to $130 from $120 just days ago.

The revised price tag may reflect the changing fortunes of Tiffany, where Chief Executive Officer Alessandro Bogliolo has cut back on entry-priced gifting options and revamped its marketing to target younger shoppers after a difficult period when the firm lost track of consumer trends.

Offerings from the 182-year-old brand include $165 heart-shaped earrings, as well as top-end options like a $165,000 diamond chain. The company gets about 44 per cent of its revenue from the Americas and 43 per cent from Asia.

Citigroup and JPMorgan Chase & Co. advised LVMH on the deal, while Tiffany hired Goldman Sachs Group.


RELATED STORIES: Citigroup JPMorgan Chase & Co. LVMH Tiffany Goldman Sachs Group





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