French luxury mega-conglomerate, LVMH has announced a deal to buy American luxury icon, Tiffany & Co. The deal is valued at $16 billion. The Wall Street Journal reports:
LVMH Moët Hennessy Louis Vuitton SA said Monday it had reached an agreement with Tiffany that values the U.S. company at $135 a share, a day after The Wall Street Journal reported that the companies had reached a preliminary agreement.
The $16.2 billion deal gives LVMH a classic American brand that has struggled with weak demand at home and abroad. It is also a bet on China’s economy and its consumers, whose fast-rising incomes have made them the luxury industry’s most important customers. In search of growth, Tiffany is building flagship stores in several Chinese cities.
The acquisition is the biggest yet by LVMH under Bernard Arnault, the French billionaire who has been the luxury group’s chief executive and controlling shareholder for three decades. It tops the $13 billion Mr. Arnault paid in 2017 to bring all of the French fashion house Dior under the ownership of LVMH.
LVMH, which owns 75 brands, has become one of Europe’s most valuable companies worth $220 billion by creating a mass market for luxury goods. Louis Vuitton, which by some estimates accounts for one-quarter of the Paris-based company’s revenue, sells leather goods starting at a few hundred dollars in more than 450 stores world-wide.
Tiffany, which sells silver bracelets for a few hundred dollars as well as diamond engagement rings for tens of thousands of dollars, has more than 300 stores globally and about $4.4 billion in annual revenue. It gets nearly $2 billion of its sales from Asia and its flagship Fifth Avenue store is popular with tourists.
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