Louis Vuitton owner LVMH has agreed to buy Tiffany for $16.2 billion in its biggest acquisition yet, as the French luxury goods maker bets it can restore the USA jeweller's lustre by investing in stores and new collections.
Acquiring Tiffany will lift LVMH's operating profits by 500 million to 600 million euros ($661.32 million) in the first 12 months, the luxury goods group's Chairman and Chief Executive Bernard Arnault said on Monday.
He continued: "We have an huge 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".
Tiffany, founded in 1837 and headquartered on 5th Avenue in NY, is one of the most iconic USA luxury brands, an image reflected in the Breakfast At Tiffany's novella by Truman Capote, made into a film with Audrey Hepburn in 1961.
"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 Rogerio Fujimori, an analyst at RBC Europe.
The boards of directors of both companies have approved the acquisition, with Tiffany's board recommending that shareholders approve the transaction. While the Tiffany & Co. signature has historically graced the dials of iconic pieces from Patek Philippe, Rolex, and more over the years (oftentimes dramatically increasing sale values at auction), the news of this corporate acquisition leaves the door wide open to the possibility of Tiffany & Co. signed TAG Heuer, Zenith, Bulgari or Hublot timepieces in the future although nothing has of yet been announced.
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While the company dwarfs Tiffany with sales of about $50 billion, some analysts had predicted LVMH might need to pay even more, with price targets of $140 at Credit Suisse and $160 at Cowen.
He said Tiffany had an "unparalleled heritage" and fitted with its other brands, Louis Vuitton and Bulgari. That's a significant increase over the $120 per share offer LVMH initially put forward.
Arnault, Europe's richest man who is the chairman and chief executive of LVMH, said: "We have an huge 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".
The companies said they expected to close the deal in mid-2020.
The company's story dates back to 1837 when founder Charles Lewis Tiffany opened a store on Broadway in NY that sold stationary, handkerchiefs and other finery.
LVMH's portfolio consists of 75 brands including Christian Dior, Louis Vuitton, and Hennessy. This transaction, which occurs at a time of internal transformation for our legendary brand, will provide further support, resources and momentum for those priorities as we evolve towards becoming the next generation luxury jeweller.