LVMH Moët Hennessy Louis Vuitton SE (LVMH), the world’s
leading luxury products group, and Tiffany & Co. have struck a $15.8
billion merger deal.
The two companies announced today that LVMH will acquire the
jeweler for $131.5 per share in cash.
The deal follows months of legal wrangling after Tiffany
hesitated on closing after initially agreeing to a sale at $135 per share, or
$16.2 billion, late last year.
Roger N. Farah, chairman of the Board of Directors of
Tiffany, said today he was “very pleased” to have reached an agreement with
LVMH at “an attractive price.”
He added, “The Board concluded it was in the best interests
of all of our stakeholders to achieve certainty of closing.”
As well as settling the pending litigation over the earlier offer, the new deal will allow both companies to work their way through the coronavirus retail blight together.
“We continue to believe in the power and value of the Tiffany brand and the compelling long-term strategic and financial benefits of this combination,” said Alessandro Bogliolo, Tiffany CEO.
The luxury retail sector has conceded it is facing a
difficult few years after global lockdowns tarnished sales. Both LVMH and
Tiffany have reported big drops in revenue and, as well as the threat from the
second wave now impacting much of Europe and the US and an impending global
recession, experts predict consumers will continue to cut back on big-ticket
items, especially luxury products.
Suresh Sunkara, Retail Analyst at GlobalData, commented, “International
travel restrictions are still in place, resulting in continued closure of duty
free stores in airports, a major contributing channel for luxury sales. As a
result, store closures and sales decline are bound to force luxury retailers to
re-evaluate their price positioning and launch affordable luxury product lines
to revive volume sales in these testing times.”
Bernard Arnault, President and CEO of LVMH, said this new
deal with Tiffany’s will help both companies me forward in the new retail
landscape.
“We are as convinced as ever of the formidable potential of
the Tiffany brand and believe that LVMH is the right home for Tiffany and its
employees during this exciting next chapter,” said Arnault.
The merger is expected to close in early 2021, subject to
Tiffany shareholder approval and customary closing conditions.
