Louis Vuitton Acquires Tiffany & Co.

(Noted News) — Moët Hennessy Louis Vuitton (LVMH), otherwise known as Louis Vuitton, has acquired iconic jewelry giant Tiffany & Co. in what is thought to be the biggest luxury goods deal in history. 

The deal, which was delayed for months because of a dispute over the price, finally went through at a price tag of $15.8 billion, about $131.5 a share. 

Originally, the two companies had tentatively agreed on a price of $135 a share, but after the price dipped in June to $114 after poor quarterly earnings, LVMH backed out of the deal while also citing fears of possible US tariffs on French goods.

LVMH said in a board meeting that the company “notably focused its attention on the development of the pandemic and its potential impact on the results and perspectives of Tiffany & Co with respect to the agreement that links the two groups… Considering the recent market rumors, LVMH confirms, on this occasion, that it is not considering buying Tiffany shares on the market.”

In response to LVMH reneging on the deal, Tiffany fired back with a lawsuit trying to force them to honor the original deal in a Delaware court. 

LVMH then defended itself by accusing Tiffany of “burning cash” to the point where it was not the same company they had originally agreed to acquire.

“The business LVMH proposed to acquire in November 2019—Tiffany & Co, a consistently highly-profitable luxury retail brand—no longer exists,” court documents said.

“Tiffany’s mismanagement of its business constitutes a blatant breach of its obligation to operate in the ordinary course. There are many examples of mismanagement detailed in the filing, including slashing capital and marketing investments and taking on additional debt.”

Roger Farah, Tiffany’s chairman, dismissed LVMH’s criticisms.

“LVMH’s specious arguments are yet another blatant attempt to evade its contractual obligation to pay the agreed-upon price for Tiffany.” 

According to a Reuters source, Tiffany approached LVMH privately with a more “conciliatory” tone, and the two companies ended up reconciling and negotiating a new deal. 

The new deal of $131.5 per share represents a $400 million discount for LVHM on the coveted New York-based jewelry company that was immortalized by Audrey Hepburn’s performance in the film Breakfast At Tiffany’s.

LVMH, owned by Bernard Arnault, France’s richest man, will be adding Tiffany’s to its jewelry division, hoping to grow its smallest sector. Currently, this division notably consists of Bulgari and Tag Heuer. 

Tiffany Chairman Farah spoke in a lighter tone on the acquisition.

“We are very pleased to have reached an agreement with LVMH at an attractive price and to now be able to proceed with the merger…The board concluded it was in the best interests of all of our stakeholders to achieve certainty of closing.”

Tiffany & Co. was founded in 1837. It employs more than 14,00 people and has roughly 300 stores worldwide, including the flagship store on 5th Avenue next to Trump Tower in New York.

LVMH has 75 companies under its luxury umbrella, including Dom Perignon, Moët, Christian Dior, and, of course, Louis Vuitton. It employs more than 156,000 people, with a global web of 4,590 stores. 

As rumors of the acquisition gained steam throughout October, Tiffany & Co.’s share price rallied more than 10%, now hovering around the $130 mark at the time of writing. 

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