LVMH to pay $22b for Tiffany in largest luxe brand deal

Tiffany, the 182-year-old New York jeweller known for its robin's egg blue boxes, operates 300 stores around the world. Its acquisition by LVMH would more than double the French group's jewellery scale.

Published 10 hours ago

PARIS French luxury group LVMH has agreed to buy Tiffany & Co for more than US$16 billion (S$21.8 billion) in the largest deal ever for the luxury goods sector.

The owner of the Louis Vuitton brand agreed to pay US$135 a share for the US jeweller, according to a statement yesterday.

That values Tiffany 37 per cent above the closing price before Bloomberg on Oct 26 reported an initial US$120-a-share approach.

Boards of both companies approved the proposal on Sunday, capping a month of talks.

Tiffany, the 182-year-old New York jeweller known for its robin's egg blue boxes, operates 300 stores around the world.

LVMH chairman Bernard Arnault is challenging Cartier owner Richemont for dominance in the global jewellery business.

While LVMH's stable of 75 brands includes Christian Dior fashion and Dom Perignon Champagne, the company has not been as prominent in jewellery as in fashion or cosmetics.

Acquiring Tiffany would more than double LVMH's jewellery scale and boost its market share to more than 18 per cent, according to Bloomberg Intelligence analyst Deborah Aitken.

"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," wrote Mr Rogerio Fujimori, an analyst at RBC Europe.

The all-cash deal is expected to close in the middle of next year.

LVMH shares rose as much as 2 per cent in morning trade in Paris, approaching a record. Tiffany's shares rose 6 per cent in pre-market trading in New York.

The deal cements a successful streak for Mr Arnault's firm, which is worth about 200 billion (S$300 billion) after its stock price quadrupled in the past eight years. To fuel growth, Europe's richest person has embraced acquisitions, spending more than US$12 billion across 19 deals since the start of 2016, according to Bloomberg Intelligence.

Yet, even with that spree, LVMH has lagged behind Richemont in luxury jewellery, a significant area of growth in emerging markets such as China. LVMH's last major deal in that area was in 2011, when it acquired the Bulgari brand.

LVMH raised its bid for Tiffany at least twice before coming to an accord, bolstering its offer to US$130 just days ago, according to people with knowledge of the situation.

The revised price tag may reflect the changing fortunes of Tiffany, where chief executive Alessandro Bogliolo has cut back on entry-priced gifting options and revamped its marketing to target younger shoppers after a difficult period when the firm lost track of consumer trends.

Offerings from the brand include US$165 heart-shaped earrings, as well as top-end options such as a US$165,000 diamond chain.