LVMH Moet Hennessy Louis Vuitton SE agreed to buy Tiffany & Co for more than US$16 billion in the largest luxury goods deal ever, raising the French conglomerate’s profile in jewelry and giving it access to a broader swath of US shoppers.
The owner of the Louis Vuitton brand agreed to pay US$135 a share for the US jeweler, according to a statement yesterday.
That values Tiffany 37 percent above the closing price before Bloomberg reported an initial US$120-a-share approach on Oct. 26.
Photo: Reuters
Boards of both companies approved the proposal on Sunday.
LVMH chairman Bernard Arnault is challenging Cartier owner Richemont for dominance in the global jewelry business.
While LVMH’s stable of brands includes Christian Dior fashion and Dom Perignon Champagne, the company has not been as prominent in jewelry as in fashion or cosmetics.
Acquiring Tiffany changes that.
“It will become the luxury jewelry global-market leader,” Bloomberg Intelligence analyst Deborah Aitken wrote in a report.
The acquisition is set to more than double LVMH’s jewelry scale and boost its market share to more than 18 percent, she said.
“Tiffany makes sense for LVMH because of the scarcity of acquisition targets with global scale and brand appeal in jewelry, the least-crowded category in the luxury sector,” wrote Rogerio Fujimori, an analyst at RBC Europe.
The all-cash deal is expected to close in the middle of next year. LVMH shares rose as much as 2 percent in morning trading in Paris, approaching a record.
Tiffany’s shares rose 6 percent in premarket trading in New York City.
They have traded steadily above the initial offer price since Bloomberg News first reported the talks late last month.
The deal cements a successful streak for Arnault’s firm, with LVMH’s stock price quadrupling during the past eight years.
To fuel growth, the billionaire, who is Europe’s richest person, has embraced acquisitions, spending more than US$12 billion across 19 deals since the start of 2016, according to Bloomberg Intelligence.
Yet even with that spree, LVMH has lagged behind Richemont in luxury jewelry, 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 US$130 just days ago, according to people with knowledge of the situation.
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 Group AG and US$160 at Cowen & Co.
The revised price tag might 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 US$165 heart-shaped earrings, as well as top-end options like a US$165,000 diamond chain.
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