LVMH finds agreement to acquire Tiffany&Co.
The new (and perhaps last) chapter of a very long saga
Fashion
October 29th, 2020
October 29th, 2020
UPDATE 29.10.20: The multibillion-dollar soap opera that LVMH's acquisition of Tiffany & Co. had become has come to a happy ending (for now). The two companies have confirmed that they have deposed their legal weapons and have finally reached a satisfactory agreement. The company's new purchase price stood at $131.50 per share, less than the original $135 per share - despite this Roger Farah, Tiffany's board chairman, called the price "attractive," just as Bernard Arnault spoke of "a balanced agreement." The agreement will be finalized, after the formal approval of Tiffany's stakeholders, in 2021.
This deal means a newfound certainty for Tiffany & Co. that has just faced one of the toughest tax quarters in its history, avoided a legal battle that would have created huge damage on both sides, and also a victory for LVMH as it prepares to conduct one of the luxury market's most important acquisitions at a discount of about $420 million on the original price.
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UPDATE 9.09.20: in November the news was sure, but with the spread of the pandemic, the situation has changed drastically. The rumours about the difficult closing of the deal between LVMH and Tiffany&Co. have been circulating since March, but today the luxury group announced that it does not intend to go on with the acquisition of the historic American jewellery, which therefore intends to file a lawsuit against the luxury group led by Bernard Arnault.
The effects of the health emergency were felt above all on the luxury sector, which is why LVMH in recent months had tried to buy the shares of the brand on the stock exchange, in order to pay them less than previously agreed. But according to the lawsuit filed by Tiffany&Co., the luxury conglomerate was trying to obtain the necessary permits to renegotiate the terms of the agreement, given the decline in the value of the brand's shares. According to what The Financial Times reports, LVMH would have tried to delay the closing of the acquisition at the request of the French Foreign Affairs Ministry, worried about the intention of the American government to impose tariffs on European and French products. The legal action undertaken by Tiffany&Co. therefore aims at forcing LVMH to complete the acquisition, which by agreement should have taken place by 24 November this year.
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UPDATE 25.11: after the leaks surfaced yesterday, the news is now official. Bernard Arnault's luxury giant has officially acquired Tiffany&Co., the historic American jewellery with more than 180 years of history, in a $16,2 billion deal, paid in cash, approximately $135 per financial action. LVMH continues in this way the diversification of its stock portfolio, ranging from luxury fashion brands such as Louis Vuitton, Dior, Celine, fine jewellery by Bulgari, cosmetics, champagne, basically redefining modern luxury.
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LVMH is interested in entering one of the fastest-growing sectors of the luxury market: jewellery. As reported by the Wall Street Journal, in fact, the French giant would be interested in the acquisition of Tiffany&Co. The offer would amount to $14.5 billion dollars (nearly €13 billion euros), valuing about 120 dollars (about 108 euros) per share reached by the U.S. chain of stores at the closing of Wall Street last Friday.
If the acquisition succeded, it would be the largest operation ever made by the French luxury group, even bigger than the one to acquire the Christian Dior label in 2017, valued €12 billion. Bernard Arnault not only wants to add to Cartier and Bulgari, already owned by him, an iconic brand made immortal by the famous movie starring Audrey Hepburn, but, above all, he wants to consolidate his position on the American market, as confirmed by the new LVMH factory opened in Texas last week with the presence of Donald Trump and his daughter Ivanka.
According to the Financial Times, Tiffany is set to reject the offer, with the report saying the offer was too low. All this despite the brand's not going through a positive period. Recently, the jewellery chain has seen its revenues stop at $4 billion a year and its stocks fall to $60 per share. At the moment, under the leadership of Alessandro Bogoglio, the American giant is trying to find a new stability. Among its first steps were the restyling of the flagship store on the Fifth Avenue in New York and of its London store in Covent Garden, which has also opened a restaurant, and the launch of a line of men's jewellery.
Stay tuned on nss magazine for all the updates.
