Diamonds, Diamonds, Diamonds

It’s Official — Tiffany & Co. and LVMH Have Tied The Knot

The French conglomerate was reported to have paid a cool US$16.6 billion for the American jeweller.

It’s Official — Tiffany & Co. and LVMH Have Tied The Knot

“We are delighted to have the opportunity to welcome Tiffany to the LVMH family,” goes the official statement by Bernard Arnault, the chairman and CEO of LVMH. This means that the French conglomerate, which already owns the likes of Swiss watchmaker Hublot and Italian jeweller Bvlgari, will be adding an American diamond to its jewellery box.

According to The Financial Times, the deal between the two companies was sealed for a cool US$16.6 billion, US$600 million over the original offer, with LVMH paying Tiffany & Co. $135 per share in cash. This is also the largest deal ever made in the history of the luxury sector.

Tiffany & Co., while a storied jewellery brand with excellent history and brand recognition — thanks to the likes of Breakfast At Tiffany’s — has reportedly become slightly dusty in the past few years, with years of weak sales everywhere except in the Asia Pacific region, where sales remain strong.

When seen in context, the acquisition makes perfect sense. It would allow LVMH to compete with other luxury contenders in the hard luxury realm. Rival Richemont group owns watch and jewellery marques such as Cartier, Van Cleef & Arpels, Piaget, and Jaeger-LeCoultre, while The Swatch Group owns that other famous American jewellery brand, Harry Winston.

According to Fortune, which quoted Jefferies analysts Flavio Cereda and Kathryn Parker, the deal could “potentially double the size and profitability” of LVMH’s hard luxury division, which is both smaller and slower-growing than its leather goods or wines and spirits divisions.

Last year, under the leadership of CEO Alessandro Bogliolo and chief artistic officer Reed Krakoff, Tiffany launched its Paper Flowers collection, which aimed to invigorate the brand and popularise it among millennials, who are reportedly more reticent when it comes to purchasing diamonds.

LVMH has had a strong track record with nurturing heritage luxury brands and growing them into modern powerhouses — Bvlgari, for instance, has grown considerably since it was acquired in 2011 — so it stands to reason that this deal has the potential to cultivate Tiffany & Co. into the global luxury powerhouse that it really can be.

And if it means that LVMH becomes even more unstoppable as a luxury company, then, well, all the better for Bernard Arnault.

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