Editor’s Note
After a month of intense negotiations, LVMH has finalized its acquisition of Tiffany & Co. for over $16 billion, marking a landmark deal in the luxury sector.
After nearly a month of circling, the Tiffany acquisition has finally been settled.
LVMH Group has successfully acquired the American jewelry brand Tiffany at a price of $135 per share.
According to the latest report from Bloomberg, on the 25th, LVMH officially finalized the acquisition deal for Tiffany, with a total amount exceeding $16 billion.
As early as the 26th of last month, informed sources revealed that LVMH was in acquisition talks with Tiffany, but Tiffany was not satisfied with the initial offer.
After the acquisition news broke out, Tiffany’s stock price, which originally had a market value of $11.9 billion, has been steadily rising. After nearly a month of negotiations, LVMH raised its offer at least twice from the original price, finally settling at $135 per share.
The multiple price hikes also indicate LVMH Group’s optimism about Tiffany’s prospects. This transaction will be conducted in cash and is expected to be fully completed by mid-2020.
Headquartered in Paris, LVMH Group, as one of the world’s top three luxury conglomerates, currently has a market value of $215 billion and owns over forty high-end brands including Louis Vuitton.
However, in the jewelry sector, it still lags behind competitors like Richemont’s Van Cleef & Arpels and Cartier. The current global jewelry market size exceeds $300 billion, and brand jewelers are aggressively entering this industry with huge growth potential to adapt to changes in emerging markets. LVMH is also actively expanding in high-end jewelry.
The last major move by LVMH Group in the jewelry field was in 2011: CEO Bernard Arnault decided to acquire Bulgari for $6 billion. Over these eight years, LVMH has successfully demonstrated its group influence over its brands. Under the leadership of its new owner, Bulgari has not only improved profitability but also expanded the brand into areas such as hotels and resorts.
As an American brand with a 183-year history, the acquired Tiffany is globally renowned for its engagement rings. Given the gradual shift in consumer perceptions, while emphasizing its brand core, Tiffany is also meeting the needs of younger demographics through more affordable products like pendants and earrings. However, its market performance has declined during this transformation. In the first half of the 2019 fiscal year, sales fell 3% to $2.1 billion, and net profit decreased 9% to $261 million.
Over the past month, the stock prices of both LVMH Group and Tiffany have repeatedly hit new highs. Through this acquisition, Tiffany, a jewelry brand increasingly popular among young Chinese consumers in recent years, may usher in new growth points.
Jewelry will become a major engine for the rapid growth of the luxury industry in the future. Bloomberg analysts believe this acquisition will make LVMH the “global leader in luxury brand jewelry,” more than doubling the scale of its future jewelry business and achieving a market share exceeding 18%.
LVMH Group’s rapid expansion in the jewelry field has put significant pressure on its competitors.
