LVMH to Acquire Tiffany & Co. for $16.2B

French luxury group LVMH Moët Hennessy Louis Vuitton and global jeweler Tiffany & Co. today announced that they have entered into a definitive agreement whereby LVMH will acquire Tiffany for $16.2 billion. The boards of the luxury businesses have been discussing a potential deal since last month, when it was reported that LVMH offered to buy Tiffany & Co. for $14.5 billion in cash. LVMH’s acquisition of Tiffany has been approved by the boards of directors of both companies. The transaction is expected to close in the middle of 2020 and is subject to customary closing conditions, including approval from Tiffany’s shareholders and the receipt of regulatory approvals.

Total Retail's Take: As we've discussed here before, the purchase of Tiffany & Co. by LMVH represents an interesting pairing that could benefit both businesses. Both companies said the acquisition will strengthen LVMH’s position in jewelry and increase its presence in the U.S. as well as assist Tiffany on the execution of its key strategic priorities to drive sustainable long-term growth.

"This transaction, which occurs at a time of internal transformation for our legendary brand, will provide further support, resources and momentum for those priorities as we evolve towards becoming The Next Generation Luxury Jeweler," said Alessandro Bogliolo, Tiffany's CEO, in a statement.

Indeed, Tiffany, founded in New York in 1837 and featured in the 1961 movie “Breakfast at Tiffany’s,” has struggled with growth over the last several years. It experienced falling annual sales and profit starting in 2015, before a revenue turnaround in 2017. The jeweler has also pushed an expansion into China, but experienced a decline in sales in the U.S. and Asia, blaming factors such as the U.S.-China trade war.

And for LMVH, which has about $50 billion in annual revenue from brands including Louis Vuitton and Dom Perignon, acquiring Tiffany would give it exposure to the bridal and diamond category as well as to more U.S. luxury customers.