LVMH settled on an accord to acquire Tiffany & Co. at around $135 per share in cash or other words, at $16.2 billion, in a move that will give the firm additional access to luxury consumers of the United States. On Sunday, CNBC primarily reported that LVMH said while confirming the deal that the purchase of Tiffany will strengthen the position of LVMH in jewelry, moreover its presence in the U.S. The company said it would also transform Watches & Jewelry division of LVMH and complement 75 distinguished Houses of LVHM.
Bernaud Arnault, the CEO of LVMH, said that the firm projected to build this jewel with the same commitment and dedication that they give to each and every of their Maison. He felt proud to have Tiffany alongside their iconic brands. Shares of LVHM were trading about 1.4% higher Monday morning after the announcement. LVMH developed a big portfolio of luxury brands all over different retail divisions, from fashion to perfume. Some of its famous brands include Louis Vuitton, Moët & Chandon, Givenchy, and Dom Perignon. Tiffany and LVMH’s boards approved the deal on 24th November, and the transaction intended to close in the 2020 middle, subject to approval from shareholders and regulatory approvals of Tiffany.
Short History of Tiffany
Tiffany established in 1837 in New York and became an iconic brand of jewelry in the 20th century, whereas it struggled with growth during the last many years. It faced dropping yearly sales as well as profit since 2015 before the turnaround of revenue in 2017. Also, the jeweler pushed growth into China; on the other side, it faced a decay in sales in the United States and Asia because of factors such as the U.S.-China trade dispute.
LVMH sweetened its proposal for Tiffany from an innovative offer of $120 for a single share, made in October. The company rebuffed it and said it expressively underrated the jewelry manufacturer. Tiffany shares have risen once again after the hopes of a higher price agreement. On Friday, the shares close at $125.51. They had traded at around $140 in the middle of 2018.
A portfolio manager at CQS New City Equity, Raphael Pitoun, said on Monday that it seems like a good match. The Tiffany branding declined a bit during the past few years, and LVMH has the best proficiency in helping brands to grow internationally, he added. Furthermore, Pitoun said that they already did the same thing with Bulgari – it was not a straightforward acquisition at that time, but they manage to really develop the brand quite strongly during the last few years. That the reason it really looks like a good fit, and it makes sense.