LVMH Moët Hennessy Group, the French luxury goods conglomerate owned by Europe’s richest man Bernard Arnault has confirmed it had made an offer to buy U.S. jewellery giant Tiffany for $14.5bn .
The of Christian Dior, Fendi, Givenchy, Louis Vuitton as well as watchmaker Tag Heuer, is planning to scale operations in jewelry one of the fastest growing part of the multi-billion dollar luxury goods market.
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 were set to grow 7percent this year.
Tiiffany with about $4 billion in revenue, is famed for diamond and sterling silver jewellery packaged in boxes shaded a distinctive blue known as “1837 Blue” and sold at more than 250 stores in the U.S., Europe and Asia. Under its CEO, Alessandro Bogliolo, Tiffany is trying to appeal to younger shoppers with more modern takes on jewellery.
Earlier this year, it launched a men’s jewellery collection, and it’s increasing its marketing to a more diverse customer base like same-sex couples. It’s also been renovating its flagship store in Manhattan.
LVMH, which is already the world’s largest luxury goods company, confirmed it “has held preliminary discussions regarding a possible transaction with Tiffany”, but refused to comment further.
If the deal goes ahead it would be LVMH’s biggest takeover under the 32-year reign of its chairman and chief executive, Arnault, a 70-year-old Frenchman who has built up a vast portfolio of luxury names at LVMH including Bulgari, Givenchy and Céline.
Jewellery and watches accounted for 9percent of revenue and 7percent of LVMH earnings in 2018, about only a fifth the size of its core fashion and handbag business, home to brands like Christian Dior, Givenchy and Louis Vuitton.
LVMH’s move on Tiffany stirred speculation about more luxury sector deals, boosting shares in European watch and jewellery companies, including Salvatore Ferragamo, Pandora, Swatch and Richemont.
The potential deal also comes as some of LVMH’s watch brands like Tag Heuer have struggled, in part as they try to adapt to the rise of smartwatches. The sector has been hit hard by turmoil in Hong Kong, a major market for high-end timepieces.
LVMH’s rivals, Gucci-owner Kering and Switzerland’s Richemont, which owns Cartier, are also bulking up in high-end jewellery.
