BY Richard Summerfield
The world’s biggest luxury group LVMH has agreed to acquire US jeweller Tiffany & Co in a deal worth $16.2bn.
The deal will see Tiffany shareholders receive $135 per share held in cash, a premium of 7.5 percent over Tiffany’s closing share price on Friday, and more than 50 percent above where it stood before LVMH’s interest emerged. The acquisition of Tiffany will strengthen LVMH’s position in the jewellery space and further increase its presence in the US.
LVMH first approached Tiffany in late October with a $14.5bn bid which was rejected as too low. The higher offer has been approved by the boards of both companies but is still subject to the approval of Tiffany’s shareholders. The deal is expected to be completed by the middle of next year.
“We are delighted to have the opportunity to welcome Tiffany, a company with an unparalleled heritage and unique position in the global jewellery world, to the LVMH family,” said Bernard Arnault, chairman and chief executive of LVMH. “We have an immense respect and admiration for Tiffany and intend to develop this jewel with the same dedication and commitment that we have applied to each and every one of our Maisons. We will be proud to have Tiffany sit alongside our iconic brands and look forward to ensuring that Tiffany continues to thrive for centuries to come.”
“Following a strategic review that included a thoughtful internal process and expert external advice, the Board has concluded that this transaction with LVMH provides an exciting path forward with a group that appreciates and will invest in Tiffany's unique assets and strong human capital, while delivering a compelling price with value certainty to our shareholders,” said Roger N. Farah, chairman of the board of directors of Tiffany.
LVMH expects the deal, which will be financed by bond issues, will add around €500 to €600m to its operating profits in the first 12 month.
The deal for Tiffany is the latest in a succession of notable deals for LVMH, which has built up a large portfolio of luxury brands across different retail sectors, including Moët & Chandon, Dom Perignon, Givenchy and Louis Vuitton.
News: LVMH aims to restore Tiffany's sparkle with $16.2 billion takeover