LVMH plans to take over Tiffany & Co for $16.9bn including net debt, equivalent to nearly four years’ sales at the company. The acquisition consolidates LVMH’s position in the luxury market. In the past five years, the company’s shares have risen threefold which includes a 60 per cent run since January. The brand is currently worth around €206bn (£175bn) and now vies with Royal Dutch Shell as the most valuable firm based in the EU.
This will be 76th brand in the Parisian group’s portfolio, joining Louis Vuitton, Dior and Veuve Clicquot champagne. LVMH emerged as the most obvious buyer for Tiffany in part because its scale begets advantages not available to smaller bauble-peddlers. The brand’s shareholders had pestered management to improve margins and raise sales fast, unduly hurrying its turnaround efforts.
LVMH will give Tiffany time and money to renovate stores and push upmarket.