This spring, LVMH Moët Hennessy Louis Vuitton quietly upped its existing stake in Italian jewelry brand Repossi. The Paris-based luxury goods conglomerate went from having a 42 percent ownership stake in the 99-year old jeweler to amassing a holding of 69 percent. Now, the world’s largest luxury goods group – which owns fashion brands like Louis Vuitton, Dior, Givenchy, and Celine, as well as ventures, such as Sephora, watchmakers Hublot and Tag Heuer, and a long list of Wines & Spirits companies – is said to be looking to bolster its jewelry offerings further by way of an acquisition of Tiffany & Co.
According to reports from an array of business publications, LVMH approached Tiffany & Co. with an “unsolicited” acquisition offer to the tune of $14.5 billion. The Finacial Times reports that Tiffany & Co. received the all-cash offer – which was “pitched at about $120 per Tiffany share, a premium of about 30 percent to its share price at the time” – earlier this month, and while it the American jewelry company has reportedly hired advisers to “review LVMH’s offer, but has not yet responded to it,” per CNBC, it is “expected to rebuff” the initial offer.
Incorporating 182-year old Tiffany & Co. into its arsenal of brands would enable LVMH to “scale in hard luxury to rival that of Johann Rupert’s Richemont, which owns Cartier and Van Cleef and is the market leader in this part of the industry,” per the FT. “Analysts say that Tiffany has scope to expand into watches, and it would increase LVMH’s client base in the core US market while opening up opportunities with customers who are unable to afford its more expensive Bulgari brand,” particularly since Tiffany & Co. has been introducing lower-cost items in an attempt to woo younger consumers.
More than that, a Tiffany & Co. acquisition “would further diversify the conglomerate, which has been riding a wave of luxury demand in China but faces risks including that country’s trade war with the U.S. and the months-long anti-Beijing protests in Hong Kong,” according to Bloomberg, which noted that if successful, the deal “would be the biggest yet for LVMH founder and Chairman Bernard Arnault, Europe’s richest man,” whose group has fared remarkably well in recent years in light of the “booming Chinese appetite for branded goods.”
“Tiffany, on the other hand, has not been as resilient,” CNBC notes. “Beyond the tariffs that have been triggered by the trade war between the United States and China, a lower Chinese domestic sales tax has also contributed to double-digit decreases in its sales to Chinese tourists in the United States and in other destinations.”
UPDATED (October 28, 2019): In a statement provided to WWD, a rep for LVMH said, “In light of recent market rumors, the LVMH Group confirms that it has held preliminary discussions regarding a possible transaction with Tiffany.”