Published: Tue, November 26, 2019
Markets | By Otis Pena

LVMH Seals Tiffany Deal for $16.2 Billion

LVMH Seals Tiffany Deal for $16.2 Billion

Arnault's LVMH, the umbrella corporation for 75 luxury brands that include Christian Dior, Bulgari, Louis Vuitton and Fendi, put a ring on it Monday with the $16 billion acquisition of Tiffany & Co., famous for its diamond jewelry.

It said that LVMH plans to leverage Tiffany's heritage and brand awareness, iconic collections, and commitment to sustainable sourcing and traceable provenance, and will "accelerate [its] ongoing strategy as part of LVMH".

While the company dwarfs Tiffany, with sales of about US$50 billion, some analysts had predicted LVMH might need to pay even more, with price targets of US$140 at Credit Suisse and US$160 at Cowen.

The all-cash deal marks the biggest-ever takeover for LVMH Chairman Bernard Arnault - Europe's richest person - as he challenges Cartier owner Richemont for dominance in the global jewelry business.

The label, which has more than 300 stores worldwide and made nearly half of its sales at home last year, has been struggling to win over younger shoppers in recent years and compete with lower-priced rivals such as Denmark's Pandora A/S and Signet Jewelers.

"We will be proud to have Tiffany sit alongside our iconic brands and look forward to ensuring that Tiffany continues to thrive for centuries to come". Arnault spoke to Trump at the opening of a Louis Vuitton leather factory in Texas last month, two days after he dispatched a top executive to propose a deal to Tiffany's chief executive.

Known for its signature robin's egg blue packaging, Tiffany rebuffed LVMH's initial advance made just five weeks ago, arguing it significantly undervalued the company.

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The sale was approved by both company's boards yesterday, said a statement from LVMH.

It confirms rumours circulating last month that the luxury goods powerhouse was intending to purchase Tiffany.

Tiffany's shares closed trading on Friday at $125.51.

LVMH is the world's largest luxury group, posting record sales of 46.8 billion euros in 2018, for a net profit of 7 billion euros.

Tiffany's shares rose 6% in premarket trading in NY. It is expected to close by the middle of 2020. It's also been renovating its flagship store in Manhattan.

Under Chief Executive Alessandro Bogliolo, former head of fashion firm Diesel and a Bulgari alumnus, Tiffany has been building up its e-commerce business and is trying to court younger shoppers with more affordable pendants, earrings and new designs.

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