LVMH Reportedly Close to Buying Tiffany for $16.7 Billion

NEW YORK, United States — French luxury conglomerate LVMH is close to acquiring American jewellery company Tiffany & Co. for $16.7 billion, according to a report Sunday by the Financial Times.

The deal could close as soon as Sunday evening after the boards of the two luxury giants meet to finish discussing details, the FT reported. LVMH is reportedly buying the luxury jewellery company in an all-cash deal, at $135 a share, or a nearly 40 percent premium to where the stock traded before deal talks were first reported in October. Tiffany has some $350 million worth of net debt.

Tiffany and LVMH did not immediately respond to BoF’s request for comment.

LVMH initially offered $14.5 billion for Tiffany, but the company said the offer was too low in early November, according to Reuters. The deal could be announced as early as Monday, the FT reported.

LVMH has much to gain from buying the storied American jeweller. The world's largest luxury conglomerate and Europe's second-most valuable company owns luxury fashion brands such as Louis Vuitton, Celine, and Christian Dior, as well as the beauty retail giant Sephora. Its market capitalisation surpassed €200 billion on the Paris Stock Exchange in early November.

Acquiring Tiffany, one of the world’s largest and best-known jewellery brands, would allow LVMH to expand its presence in the US, as well as China, where Tiffany has grown its business in the region through a retail expansion.

Jewellery was also one of the best-performing categories for luxury in 2018, according to Bain & Co, which predicts that the global $20 billion market will grow 7 percent this year. Adding another global jewellery brand to its portfolio would also allow LVMH to gain further ground on Richemont, which owns Cartier and Van Cleef & Arpels, and has long dominated the hard-luxury category.

Tiffany has over 300 stores around the world, but the company has had a difficult time in recent years. It's been updating its store experience, and recently hired former Barneys chief executive Daniella Vitale to reposition its brand identity. While the company continues to grow in China, it has struggled to win over Millennials and Gen-Z consumers in the West, as young shoppers move away from traditional occasion-based gifting and self-purchasing rises in popularity. In the first half of 2019, worldwide net sales at Tiffany decreased 3 percent to $2.1 billion.

At a Bloomberg conference in New York last week, Tiffany Chief Executive Alessandro Bogliolo addressed the changing market for luxury.

“When I was young, it was important to buy a famous brand and a beautiful product [but] Millennials have much more questions,” Bogliolo said. “They want to know why Tiffany is famous, what do they stand for, and why should I go to them.”

By joining LVMH's portfolio, Tiffany could tap into LVMH's extensive retail network, as well as its marketing and branding expertise.

Bogliolo added that he believed Tiffany fans wouldn’t care about the company getting acquired.

“Customers, they don’t care about your shareholders,” Bogliolo said. “Customers care about your product — about your brand, about sustainability, about the beauty of your products. This is what really makes success.”

Stay tuned to BoF for updates to this developing story.

Disclosure: LVMH is part of a group of investors who, together, hold a minority interest in The Business of Fashion. All investors have signed shareholder's documentation guaranteeing BoF's complete editorial independence.

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