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LVMH Buys Tiffany For $16 Billion, The Biggest Deal In The Luxury Industry

Luxury giant LVMH Moët Hennessy Louis Vuitton has reached an agreement to buy American jeweller Tiffany & Co for $16.2 billion.

A deal analyst agree is the biggest in the history of the global luxury goods industry.

The announcement was made on Monday bt the two companies as they entered an agreement for LVMH to acquire Tiffany for $135 a share. The multi-billion dollar deal is expected to restore the fading glory of Tiffany & Co.

The all-cash acquisition is one of the largest ever for the French conglomerate known for its hard-charging deal-making and surpasses its $13 billion deal for Christian Dior in 2017. The announcement ends a month of speculation, after reports that LVMH had approached the storied jeweller leaked in October. LVMH initially offered $14.5 billion for Tiffany, according to Reuters, but the company said the offer was too low.

That wasn’t the first time LVMH — Europe’s second-most valuable company, with a market capitalisation surpassing €200 billion — had set its sights on Tiffany. The conglomerate reportedly expressed interest in the jeweller prior to its takeover of Bulgari in 2011 — LVMH’s last major investment in hard luxury.

The storied American brand has resisted acquisition for years, but as one of the few independent global jewellery houses remaining in the market, analysts had long speculated that it would make an attractive, if expensive, target.

But Tiffany has had a difficult time lately. The American jeweller is facing weak demand at home and abroad, and will likely need heavy investment to re-energise its brand and business.

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.

The deal will bring LVMH’s substantial financial and market clout to help support Tiffany’s ongoing transformation efforts. At the same time, it boosts the French company’s presence in the US market.

Last month, LVMH Chief Executive Bernard Arnault had a controversial photo op with President Donald Trump at the opening of a new Louis Vuitton handbag factory in Texas, doubling down on the country.

The deal also allows LVMH to gain further ground on Swiss conglomerate Richemont, which has long dominated hard luxury with its ownership of Cartier and Van Cleef & Arpels. Jewellery was one of the best-performing luxury categories in 2018, according to Bain & Co., which predicts that the global $20 billion market will grow 7 percent this year.

“This is good news, and somewhat expected,” said Bernstein analyst Luca Solca. The deal is priced slightly above expectations, but “still good news for both shareholder bases.”

LVMH’s shares were up nearly two per cent in early morning trading. The deal is expected to close in mid-2020 subject to approval from Tiffany’s shareholders.

Additional report from