November 26, 2019

Luxury fashion giant LVMH to buy Tiffany for $16.2B

LVMH, Tiffany and Co, Bernard Arnault

Luxury conglomerate LVMH will buy Tiffany & Co. for about $16.2 billion after courting the storied New York jeweler for about a month, the companies announced Monday.

The $135-per-share cash purchase will add Tiffany to Paris-based LVMH’s portfolio of 75 high-end brands as its blue-box stores struggle with lagging sales.

The deal will give the 182-year-old retailer more resources and support for its efforts to “drive sustainable long-term growth” as the brand undergoes an “internal transformation,” Tiffany CEO Alessandro Bogliolo said.

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“As part of the LVMH group, Tiffany will reach new heights, capitalizing on its remarkable internal expertise, unparalleled craftsmanship and strong cultural values,” Bogliolo said in a statement.

The marriage is widely expected to help return some dazzle to the iconic retailer made famous by the 1961 romantic comedy “Breakfast at Tiffany’s” starring Audrey Hepburn.

“Tiffany is a brand that has had very strong customer loyalty, but for some reason has lagged other luxury companies for the last decade,” Edward Jones analyst Brian Yarbrough said. “LVMH needs to figure out why Tiffany’s has not generated excitement and newness.”

Other industry experts said Tiffany alienated some of its older, established clients, who defected to such luxury brands as Van Cleef & Arpels, when it pandered to millennials inking endorsement deals with Lady Gaga and others who were supposed to make the venerable brand more hip.

The acquisition is reportedly the largest ever for LVMH, which is led by chairman and CEO Bernard Arnault, the world’s third-richest man. Both companies’ boards of directors have approved the deal, which is expected to close in the middle of next year.

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Tiffany shares were up 5.7 percent after the markets opened Monday morning, while LVMH’s were up 1.1 percent.

LVMH has been looking to snap up Tiffany for about a month. A top executive for the company flew to New York on Oct. 18 to present Tiffany with a $120-per-share offer, a price LVMH faced calls to raise, The Post has reported.

“We have 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,” Arnault said in a statement.

Since its founding in 1837, Tiffany has grown to encompass more than 300 stores across the world selling engagement rings and other top-of-the-line jewelry. But the company’s stock has suffered amid the US trade war with China, which has diminished Chinese tourists’ spending at its Fifth Avenue flagship, The Post has reported.

Tiffany saw worldwide net sales fall 3 percent to $2.1 billion from February through July, while its net earnings slid 9 percent from the prior year to $261 million, according to an August earnings report.

Source: NY Post

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