LVMH has offered $14.5 billion to buy Tiffany & Co: Everything you need to know
A landmark moment in the world of business, super-group LVMH has offered a whopping US $14.5 billion to aquire Tiffany & Co., a true institution in the luxury landscape. Here's what's going on.
What is LVMH?
LVMH is actually one of the largest conglomerates in the world with well over 75 brands including Bulgari, Givenchy, Hennessy, and Rimowa.
LVMH-owned Louis Vuitton
LVMH is so massive in fact that it’s CEO Bernard Arnault has become only the third person in history to be worth over US $100 billion, making him one of the world’s richest alongside Bill Gates and Jeff Bezos. According to LVMH’s reports, it has a revenue in 2019 of around US $42 billion, making it one of the largest luxury goods companies in the world.
The full name of the company is actually LVMH Moët Hennessy – Louis Vuitton SE and it was founded only in 1987; 32 years ago. The company began that year when Louis Vuitton merged with Moët Hennessy and since the company has been growing its portfolio of luxurious brands across various sectors.
What is Tiffany & Co.?
Tiffany & Co. was founded back in 1837 by Charles Lewis Tiffany and John B. Young as just a "stationary and fancy goods emporium." Charles Tiffany rebranded the company to focus on jewellery in 1853 with a focus on fixing prices on its goods to avoid any haggling and evoke a greater sense of professionalism.
Today Tiffany specialises in engagement rings, silver, china and crystal, fragrances, and most recently even men's watches. Tiffany has stores across the globe all using its iconic light blue colour which is seen on a lot of the products and packaging. The brand had long-since been female-focused but in recent years has made strides in releasing mens' products.
What is LVMH offering?
Reuters has reported that LVMH has approached none other than Tiffany & Co. with an offer to acquire the American jewellery titan.
“In light of recent market rumours, LVMH Group confirms it has held preliminary discussions regarding a possible transaction with Tiffany,” the company said in a statement. “There can be no assurance that these discussions will result in any agreement.”
Tiffany & Co.'s most iconic store in New York
Right now then the deal is still being talked over, LVMH is offering US $14.5 billion to take over the American jeweller and retailer. This means that LVMH is valuing Tiffany’s stock at around US $120 per share, over US $20 more than Tiffany’s current share price according to Reuters. LVMH is clearly willing to pay a premium to absorb the 1837-born company.
What are people saying?
Analysts at Jefferies told The Guardian: “If a bid at this level, or indeed higher, was confirmed, it would be the largest M&A [mergers & acquisition] transaction to date for LVMH but one it could comfortably afford.”
The Royal Bank of Canada analyst Rogerio Fujimori said: “Tiffany would become a better company and stronger competitor under the ownership of LVMH. This is illustrated by Bulgari’s tremendous success after being taken over in 2011 by LVMH.”
“Hard luxury is the only subsector where LVMH is not the leader (and we know that Mr Arnault likes to be always number 1),” he said. “Jewellery is the least-crowded category in the sector, with only a handful of truly global players, and Tiffany has a proven brand equity in Asia, where it has consistently ranked among the top three jewellery brands in our Chinese consumer surveys over the years.”
Will Tiffany & Co go for it?
Reuters has revealed that Tiffany has specifically hired advisers to go over the LVMH deal, the deal however is preliminary and non-binding, meaning that many things could change till Tiffany reaches a final decision.
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Vision & Virtuosity #VisionaryTiffany ——— Tiffany & Co.—an icon. In 1958, Truman Capote published "Breakfast at Tiffany’s," which was made into the renowned film of the same name in 1961 starring Audrey Hepburn®. Never-before-seen artifacts, Audrey Hepburn®’s annotated script, renderings by renowned Hollywood costume designer Edith Head and unpublished stills from the making of the film all tell a story unique to Tiffany & Co. Discover more via the link in bio. #Tiffany #TiffanyAndCo