by Katia DOLMADJIAN
LVMH and US jewellers Tiffany announced Monday a $16.2 billion tie-up that vaults the French group to the top spot in the luxury jewellery segment.
The deal comes after LVMH, already the top luxury firm overall, spent more than a month wooing Tiffany, the most iconic of US luxury brands known for its wedding rings and diamonds.
“It is an emblematic brand, an American icon that will become a little bit French,” LVMH’s chief executive Bernard Arnault told AFP. “It has lots of potential and an incredible history.”
Tiffany, founded in 1837 and headquartered on glamorous 5th Avenue in New York next to Trump Tower, is the most iconic of US luxury brands, an image reflected in the “Breakfast at Tiffany’s” novella by Truman Capote, made into a film with Audrey Hepburn in 1961.
The companies said in a joint statement that LVMH will acquire Tiffany for $135 per share in cash in a transaction with an equity value of approximately 14.7 billion euros or $16.2 billion.
The deal adds Tiffany to LVMH’s extensive stable of luxury brands that include Louis Vuitton, Dior and Moet & Chandon and will strengthen its position in the United States.
Tiffany “is a very well-known brand, one of the rare global brands to have a strongly recognised heritage, in the United States obviously because it is its top market but in Asia as well,” said Arnault.
Such a deal has been seen as the way ahead for Tiffany, which has trailed rivals in terms of sales growth in recent years.
“Following a strategic review that included a thoughtful internal process and expert external advice, the Board has concluded that this transaction with LVMH provides an exciting path forward…” said Tiffany’s board chairman, Roger Farah.
The addition of Tiffany to LVMH’s jewellery holdings that already includes Bulgari, Chaumet, Tag Heuer and Hublot vaults it past Swiss-based Richemont, which holds Cartier among other brands.
Richemont led the pack with a 14.8 percent share of the luxury jewellery market in 2017, according to Euromonitor International data.
But with Tiffany at 10.8 percent and LVMH at 7.5 percent, combined they will now lead the segment.
LVMH began its public courting of Tiffany on October 15 with an offer of $120 per share. Last week it raised its bid to around $130, which convinced Tiffany to open its books to LVMH, which then offered $135 to clinch the deal.
Tiffany’s shares closed trading on Friday at $125.51. They were trading around $90 per share at the beginning of October, before LVMH first began to make overtures to Tiffany’s management.
LVMH shares rose 2.3 percent to stand at 405.30 euros in midday trading in Paris. They have risen since the LVMH first announced a bid for Tiffany, and struck a record high of 407.85 earlier this month.
“Some companies in the retail sector have complained about softer demand, but luxury brands tend to hold up well when economies cool as the mega rich usually fare better in a cooler economic climate,” said market analyst David Madden at CMC Markets UK.
The boards of directors of both companies have approved the acquisition, with Tiffany’s board recommending shareholders approve the transaction.
The companies said they expect the transaction to close in the middle of 2020 following approval by Tiffany’s shareholders and regulators.
LVMH is the world’s largest luxury group when high-end cars are excluded. It posted record sales of 46.8 billion euros in 2018.
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