LVMH Makes $14.5B Offer to Buy Tiffany & Co.

French luxury group LVMH Moët Hennessy Louis Vuitton confirmed Monday that is has offered to buy Tiffany & Co. for $14.5 billion in cash, sending shares in the New York jeweler soaring. The purchase would add another household name to LVMH's portfolio of upscale brands, including Christian Dior, Fendi and Givenchy, as well as watchmaker Tag Heuer. It would also give LVMH a much broader foothold in the United States and widen its offerings in jewelry. Tiffany & Co. is said to be considering the acquisition offer, but hasn't yet come to a final decision.

Total Retail's Take: The potential purchase of Tiffany & Co. by LMVH represents an interesting pairing that could benefit both businesses. Adding Tiffany & Co. would expand the French giant’s potential market with somewhat more accessible offerings. Unlike Bulgari’s more rarefied offerings, such as 2 million euro ($2.2 million) wristwatch, Tiffany is better known for engagement rings that might cost a couple months’ pay. As for why Tiffany would be interested in the deal, the resources afforded to it being a brand in the LVMH stable would enable it to continue the recent positive momentum it has created under the tutelage of its CEO Alessandro Bogliolo who was hired by the U.S. jeweler two years ago. 

“Retail is consolidating and Tiffany has had a number of ups and downs in recent years," notes Sucharati Modali, vice president and analyst at Forrester Research. "It comforts me if LVMH could be the buyer. That would be the scenario that preserves the brand equity most and would be a better outcome for the long-term equity of the brand than a private equity buyer. Tiffany would become a better company and stronger competitor under the ownership of LVMH.”