Tiffany shareholders approve company’s acquisition by LVMH

By

Robin Driver

Published
Feb 4, 2020

The shareholders of Tiffany & Co. have given the thumbs up to a $16.2 billion deal that will see the iconic New York-based jewelry brand acquired by French luxury conglomerate LVMH, owner of Louis Vuitton, Christian Dior, Fendi and Givenchy, among others.
 

First announced in November of last year, the agreement involves LVMH paying $135 per share in cash to acquire Tiffany and was approved “overwhelmingly” by the American jeweler’s shareholders at a special meeting held on Tuesday.
 
“This approval is a significant milestone as we move closer to completing our acquisition of Tiffany, an iconic company with a rich heritage and unique positioning in the global luxury jewelry market,” commented LVMH chairman and CEO Bernard Arnault in a release. “A globally recognized symbol of love, Tiffany will be an outstanding addition to our unique portfolio of luxury brands.”

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At LVMH, Tiffany will be joining brands such as Bulgari, Chaumet, Tag Heuer and Hublot in the company’s jewelry portfolio, and will boost the Paris-based luxury group’s presence in the category at a time when demand for fine gems is on the rise.
 
The brand will also help LVMH consolidate its position in the United States. In return, Tiffany, which has seen sales slow somewhat recently, is expected to benefit from the French luxury giant’s vast international infrastructure and marketing capacities
 
LVMH first offered Tiffany $120 per share in October 2019 but was quickly convinced by the brand to up its bid to around $130 per share, for a total valuation of approximately $16 billion.
 
The raise led Tiffany to open its books to LVMH, which sweetened its offer yet again to its current bid of $135 per share. Tiffany’s acceptance of the offer was then announced on 25 November.
 
LVMH, which is the world's largest luxury group, reported record sales of 53.7 billion euros (approximately $59.3 billion) in fiscal 2019, with profits totaling $7.2 billion (around $7.9 billion).
 
Tiffany reported net sales of $4.4 billion in fiscal 2018, while the company’s net earnings were $586 million.
 
The jeweler’s sales have decelerated since the beginning of 2019, totaling $3.1 billion in the nine months ended October 31, 2019, down 2% compared to the same period in the previous year, due largely to softness on the company’s domestic market. Net earnings for the period fell 11% to $340 million.
 
Hope was provided, however, by Tiffany’s more optimistic predictions for Holiday 2019, when sales growth is expected to have been between 1% and 3%, driven by an uptick in Chinese spending and rallying American demand.
 
The transaction between LVMH and Tiffany is expected to close in the middle of 2020 and is subject to regulatory approvals and other customary closing conditions.