LVMH, the world’s biggest luxury group, is to take over Tiffany & Co, the US jeweller famed for its engagement rings and white diamond necklaces, in a $16.2bn (£12.6bn) deal.
Bernard Arnault’s luxury goods empire, with brands such as Louis Vuitton, Dior and Moët & Chandon, announced it had agreed to pay $135 a share in cash.
LVMH said the deal would transform its watches and jewellery division, which includes Bulgari, TAG Heuer and Hublot, and boost its presence in the US. It is the latest addition to the group’s 75 big brands, known as “maisons” or houses.
The French company wants to to restore shine to Tiffany, whose revenues have slowed due to lower tourist spending. Founded in 1837 when Charles Lewis Tiffany opened the first store in downtown Manhattan, New York, the US jeweller now has more than 300 stores worldwide and employs more than 14,000 people.
Its flagship store featured in the film Breakfast at Tiffany’s, where Audrey Hepburn’s Holly Golightly character mused “nothing very bad could happen to you”. Tiffany’s engagement and wedding rings range from £1,400 for a platinum band to £43,400 for a double-halo ring with pink diamonds. It also sells sterling silver rings starting at £155, with a “love heart ring” priced at £310.
It is LVMH’s biggest takeover under the 32-year reign of Arnault, its 70-year-old chairman, chief executive and majority shareholder, who has amassed a vast number of wine, spirit, fashion, leather, perfume, cosmetics and watch brands ranging from Dom Pérignon, Veuve Clicquot and Krug champagne to Givenchy, Kenzo and Marc Jacobs fashion.
Arnault, Europe’s richest man, said: “We have an immense respect and admiration for Tiffany and intend to develop this jewel with the same dedication and commitment that we have applied to each and every one of our maisons.
“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.”
Hard luxury – watches and jewellery – is one of the fastest-growing areas and is the only sector where LVMH is not 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 jewellery brand in China.
Rogerio Fujimori, an analyst at Royal Bank of Scotland, said: “Tiffany makes sense for LVMH because of the scarcity of acquisition targets with global scale and brand appeal in jewellery, the least crowded category in the luxury sector.
“Tiffany could be highly complementary to LVMH’s hard luxury portfolio because Tiffany has a broader consumer base than Bulgari thanks to its higher exposure to more affordable price points given its well-established silver jewellery offer.”
LVMH first approached Tiffany in late October with a $14.5bn bid but this was rejected as too low. The higher offer has been approved by the boards of both companies and still needs the backing of shareholders. The deal is expected to be completed in the middle of next year.
Anusha Couttigane, fashion and luxury goods analyst at data consultancy Kantar, said: “Should the bid go through, we can expect to see aggressive marketing and collaborations with interesting designers, of which LVMH has many to choose from.”
Alessandro Bogliolo, the Tiffany chief executive and a former LVMH executive, said: “As part of the LVMH group, Tiffany will reach new heights, capitalising on its remarkable internal expertise, unparalleled craftsmanship and strong cultural values.”
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