In a deal worth $16.2bn, LVMH, the world’s biggest luxury group, has reached a deal to acquire Tiffany & Co, US jeweler famed for its engagement rings and white diamond necklaces.
The company, which has premium brands such as Louis Vuitton, Dior and Moët & Chandon, announced it had agreed to pay $135 a share in cash.
According to LVMH, the deal would transform its watches and jewelry division, which includes Bulgari, TAG Heuer and Hublot, and boost its presence in the US.
The Tiffany takeover would mark one of LVMH’s biggest acquisitions as it continues to expand its interest in jewelry and exposure to the US markets.
The hard luxury section-watches and jewelry – is one of the fastest-growing areas and is the only sector where LVMH is not a leader.
The Tiffany deal will enable it to challenge Cartier owner Richemont’s dominance. The world’s biggest luxury groups have been buying up smaller brands as they compete for younger customers and high-spending Chinese consumers. Tiffany is a well-recognised jewelry brand in China.
According to Bloomberg Intelligence, by adding Tiffany to its stable of brands, LVMH will more than double its market share in jewelry to 18.4 percent, surging ahead of Johann Rupert’s Richemont, at 14.8 percent.
According to Bain & Co, management consulting firm, jewellery was one of the strongest-performing areas of the luxury industry in 2018, forecast that comparable sales in the 18 billion euro ($20 billion) global market was set to grow 7% this year.
Europe’s richest man, Bernard Arnault’s luxury goods empire, and Chairman of the company, first approached Tiffany in late October this year with a $14.5 billion bid. However, after the review of the proposal by Tiffany’s Board of Directors, it was rejected as the amount was termed too low. The new deal values each Tiffany share at $135 in cash which is higher than the initial offer of $120 a share.
Tiffany founded in 1837 by Charles Lewis Tiffany opened the first store in downtown Manhattan. Presently, Tiffany now has more than 300 stores around the globe. Apart from jewelry, the company sells stationery, fragrances, water bottles, personal accessories, and leather goods.