Louis Vuitton Parent LVMH Acquires Tiffany & Co. For $16.3 Billion

Ending speculations, French luxury major LVMH, parent of Louis Vuitton reportedly reached a deal to buy American luxury firm Tiffany at $135 a share or $16.3 billion.

The luxury majors had been in talks and the deal may be announced Monday, per CNBC report. LVMH is headed by Europe’s richest man, Bernard Arnault.

The deal may also mark the end of the century-long stand-alone brand status of New York-based Tiffany founded in 1837. The jeweler had been facing growth issues including falling sales and profit since 2015.

Tiffany’s push into China was also not very successful and the U.S.-China trade war also hurt its ambitious plans.

Advantage LVMH

Paris-based LMVH houses many top brands in its roaster of 75 brands. They include Louis Vuitton and Dom Perignon. Tiffany’s popular brands also include Bulgari, Hublot, and Tag Heuer.

Taking over Tiffany would give LVMH greater leverage into the “hard luxe” segment where it is not very strong and also expand its access to the U.S market.

The hard luxe sector covers the bridal and diamond category. LVMH has main rivals in Kering that owns Gucci and Richemont owner of Cartier. They are also upping their exposure to the high-end jewelry segment.

Consultancy Bain & Co notes that jewelry is one of the growth areas of the luxury industry and the global market was predicted to grow 7 percent during the year.

According to a New York Times report, the $16 billion acquisition is the largest ever in the luxury sector.

LVMH is very strong in the soft luxe segment such as fashion, wines and spirits, leather sectors and home to famous brands such as Dior, Givenchy, Fendi, Château d’Yquem and Dom Pérignon. LVMH may likely keep its Bulgari and Tiffany’s brands separate after the deal.

Bulgari is an Italian luxury brand known as watches, jewelry, accessories, fragrances, and leather goods. Tiffany brand is recognizable worldwide thanks to its signature blue boxes and the romantic hue it evokes in the luxury market landscape.

Tiffany will be LVMH’s second investment in an American brand in 2019. This year the French major t created a new luxury house, Fenty in association with pop icon and beauty entrepreneur Rihanna, short for Robyn Rihanna Fenty.

The LVMH group also inaugurated a factory for Louis Vuitton in Texas in October. The facility for making handbags for the American market had President Donald Trump as chief guest to cut the symbolic ribbon.

In October Tiffany board had rejected an all-cash offer of $120 a share. Tiffany has about $350 million in debt. The deal buzz had given shares of Tiffany a boost. On Friday’s trading, Tiffany shares closed at $125.51. The stock traded at about $140 in June 2018.