Breakfast with Tiffany's: LVMH Makes Deal for $16.2 Billion

LVMH Moët Hennessy Louis Vuitton SE sweetened its late October $14.5 billion all-cash offer by nearly 12% and made Tiffany & Co. (NYSE: TIF) an offer it couldn’t refuse. The Paris-based luxury goods giant raised its bid (again) for the iconic American firm to $16.2 billion ($135 a share), again all in cash and the two companies on Monday announced a definitive agreement under which LVMH will acquire Tiffany.

Last week, LVMH boosted its bid for Tiffany from the original $120 a share to $130 in exchange for a due-diligence look at the jewelry maker’s books. Apparently, Bernard Arnault, the world’s richest person and chairman and CEO of LVMH, liked what he saw and agreed to add a few hundred million more in order to clinch the deal.

The final price represents a 37.5% premium to Tiffany’s stock price based on the last day of trading before the LVMH discussions became public. The agreed price is also nearly $5 a share higher than Tiffany’s 52-week high, set the day LVMH’s made its first offer.

Arnault said:

We are delighted to have the opportunity to welcome Tiffany, a company with an unparalleled heritage and unique position in the global jewelry world, to the LVMH family. We have an immense respect and admiration for Tiffany and intend to develop this jewel with the same dedication and commitment that we have applied to each and every one of our Maisons. We will be proud to have Tiffany sit alongside our iconic brands and look forward to ensuring that Tiffany continues to thrive for centuries to come.

Billionaires make no small plans.

Roger N. Farah, Tiffany’s chairman added:

Following a strategic review that included a thoughtful internal process and expert external advice, the Board has concluded that this transaction with LVMH provides an exciting path forward with a group that appreciates and will invest in Tiffany’s unique assets and strong human capital, while delivering a compelling price with value certainty to our shareholders.

LVMH owns a nearly endless list of luxury brands including Louis Vuitton, Dom Perignon, Christian Dior, Fenty, and Sephora. It acquired its major jewelry brand, Bulgari, in 2011 for around $6 billion and the company also owns the TAG Heuer watch brand.

The deal is expected to close in mid-2020 subject to a vote by Tiffany’s shareholders and required regulatory approvals.

Tiffany’s stock traded up about 5.8% at $132.79 in Monday’s premarket session. The stock’s 52-week range $73.04 to $130.40 and the 12-month consensus price target was $121.55.

LVMH traded up about 1.7% in Paris at €403.05 in a 52-week range of €242.30 to €407.85.

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