Published: Wed, November 27, 2019
Money | By Ethel Goodwin

Tiffany: American jeweler headed for the LVMH empire

Tiffany: American jeweler headed for the LVMH empire

According to a statement from LVMH, the acquisition will strengthen its position in jewellery and "further increase its presence in the US".

The two groups may officially announce the deal before the opening of the European markets Monday, the source added.

The $135-per share cash deal will boost LVMH's smallest business, the jewellery and watch division that is already home to Bulgari and Tag Heuer, help it expand in one of the fastest-growing industry sections and grow its USA presence.

Flavio Cereda, an equity analyst at Jeffries, stated in a note prior to the deal announcement that Tiffany's "brand equity and the strength of the image of its iconic 1837 Blue Box are more valuable than the current financials suggest".

Bernard Arnault, the chairman and CEO of luxury goods maker LVMH, has seen his net worth jump to just over $106 billion following the 1% gain in the stock of his company on Monday, after the announcement that his company was acquiring the iconic jewelry brand Tiffany.

The agreement comes after the Tiffany board, in October, rejected an all-cash offer by LVMH of $120 a share - an offer that many analysts agreed was too low.

LVMH - of which Arnault and his family own more than 47%, per CNN - now claims more than 70 luxury brands under its umbrella, including Christian Dior, Louis Vuitton, Fendi, Celine, Bulgari, Hublot, TAG Heuer, and Dom Perignon champagne, according to Fortune. Tiffany was made a household name by the 1961 Audrey Hepburn film, Breakfast at Tiffany's, based on the novel by Truman Capote.

The deal is expected to close mid-2020 and is subject to approval from Tiffany's shareholders, regulatory approval, and other customary closing conditions.

A recent jump in LVMH's share price could push Arnault's net worth above that of both Bezos and Gates, CNN's Paul R. La Monica reported Tuesday. It's also been renovating its flagship store in Manhattan. LVMH shares rose as much as 2% in morning trading in Paris, approaching a record.

The acquisition positions LVMH, the world's biggest luxury conglomerate, squarely on the turf occupied by its rival Richemont, the owner of Cartier. The deal, "which occurs at a time of internal transformation for our legendary brand", would help provide that support.

Under Chief Executive Alessandro Bogliolo, former head of fashion firm Diesel and a Bulgari alumnus, Tiffany has been building up its e-commerce business and is trying to court younger shoppers with more affordable pendants, earrings and new designs.

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