Louis Vuitton to purchase American luxury jewelry chain, Tiffany and Co., at $16.3 billion

Louis Vuitton to purchase American luxury jewelry chain, Tiffany and Co., at $16.3 billion
Written by:
Michael Harris
March 11, 2020
  • Louis Vuitton is buying the American luxury jewelry chain, Tiffany & Co., at $135 per share.
  • Tiffany & Co. has printed declining annual sales and profit in the past four years.
  • Louis Vuitton's share prices are yet to respond to the news.

Paris based multinational luxury goods conglomerate, Louis Vuitton (LVMH) announced on Sunday that it will soon be signing a deal to purchase Tiffany and Co. Tiffany and Co. is a leading name in American luxury jewelry. The deal is currently valued at $16.3 billion.

The Deal Has Been Finalized At $135 Per Share

As per the sources, LVMH has agreed to purchase the New York-based jewelry chain at $135 per share. It was further added that the prerequisites of the deal have already been finalized and the announcement will be officially made at the start of the upcoming week.

Sources have also informed that negotiations were being made for some time. Louis Vuitton had to increase its bid to slightly over $16 billion in order for Tiffany and Co. to accept the deal and pledge the provision of confidential due diligence to the luxury goods conglomerate in the near future.

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Tiffany and Co. was reported to have rejected the LVMH’s bid earlier this month. At $120 per share (all cash), the American luxury jewelry store cited that the offer doesn’t align with the company’s market value. The revised offer from LVMH ($135 per share), however, was sufficiently lucrative for Tiffany and Co. to sign the agreement.

Tiffany and Co. is one of the oldest and widely known names in American luxury jewelry. In the past four years, however, Tiffany has printed a consistent decline in annual sales and profit.

As of 2018, Bain & Co. consultancy declared jewelry as the best performing segment of the luxury industry. The $20 billion market was forecasted to note a growth of 7% in 2019. Despite the rising demand, however, Tiffany and Co. continued to struggle with the annual sales and profit that ultimately led to Louis Vuitton purchasing the company at $135 per share.

Focus On E-Commerce Or Modern Designs/Affordable Prices Failed To Save Tiffany & Co.

CEO Alessandro Bogliolo diligently focused on promoting e-commerce and offering modern designed pendants and earrings at affordable prices to entice the young customers in hopes of revitalizing the sales for the company. Despite consistent efforts, however, the recent development highlights that Bogliolo failed in achieving his objective.

Share prices for LVMH are currently at around €397. The performance for LVMH stock has mostly been upbeat in 2019. The stock was reported to be trading at around €253 at the start of the year. According to the analysts, the stock market is yet to respond to the news but an imminent move can be expected with the start of the new week.