Editor’s Note
This article reports on the potential finalization of LVMH’s acquisition of Tiffany & Co., a landmark deal in the luxury sector. The information is sourced from a Financial Times report citing unnamed individuals. As negotiations are ongoing, the final terms may differ.
Foreign media reports indicate that the largest acquisition in the history of the luxury goods industry is about to be finalized.
On October 29, citing sources familiar with the matter, the Financial Times reported that the board of directors of the renowned American jewelry brand Tiffany has agreed to sell the company to LVMH Moët Hennessy Louis Vuitton, the French luxury goods conglomerate and parent company of LV.
The sources stated that LVMH will acquire Tiffany at a price of $131.50 per share, slightly lower than the acquisition price of $135 per share agreed upon by both parties in November last year. Based on this calculation, the valuation of Tiffany is approximately $15.8 billion.
As of the close of U.S. stock trading on October 28, Tiffany’s stock price was $129.95 per share, an increase of 0.83% from the previous trading day.
In November 2019, LVMH reached an agreement with Tiffany to acquire the latter for $135 per share, totaling $16.2 billion. However, before the completion of this acquisition, the outbreak of the COVID-19 pandemic and ongoing large-scale protests in the United States led LVMH to consider renegotiating the acquisition price.
Previously, Reuters cited sources stating that LVMH’s CEO, Bernard Arnault, had been attempting to pressure Tiffany to lower the previously agreed transaction price of $135 per share. During their negotiations, LVMH and Tiffany had agreed to postpone the initial acquisition deadline from August 24 to November 24, but the relationship between the two parties continued to deteriorate. With no progress in the negotiations, LVMH announced in September of this year that it would terminate the acquisition of Tiffany.
The Financial Times pointed out that Arnault’s efforts over several months to secure a lower acquisition price indicate that he did not want to abandon the deal. However, some analysts questioned why LVMH would agree to a deal at only a slightly lower price after months of intense conflict between the two parties.
Flavio Cereda, an analyst at Jefferies, stated.
However, Cereda also noted that such an acquisition would still have a positive impact on LVMH, as the company has long sought to expand its watch and jewelry business. In the “hard luxury” segment of watches and jewelry, the Richemont Group, which owns the Cartier brand, holds a stronger position than LVMH.
Data shows that currently, the aforementioned business accounts for only 8% of LVMH’s sales and 6.5% of its operating profit, while the majority of the company’s profits come from “soft luxury” items such as LV bags and clothing.