LVMH gets access to Tiffany’s books after raising bid
The French group will get exposure to the bridal and diamond category, as well as to US luxury shoppers, if the deal goes through
New York — French luxury group LVMH has persuaded US jewellery chain Tiffany & Co to provide it with confidential due diligence after it raised its bid to close to $16bn (R235.4bn), people familiar with the matter say.
The development represents a milestone in LVMH’s bid for the iconic US maker of engagement rings. Tiffany earlier in November rebuffed LVMH’s initial $120-per-share all-cash offer, arguing it significantly undervalues it.
Tiffany agreed to provide LVMH with access to its books, after the latter sweetened its bid to close to $130 a share, the sources said. Tiffany plans to continue to negotiate for a better offer, and there is no certainty a deal will be reached, they added.
LVMH and Tiffany did not immediately respond to requests for comment.
Tiffany shares jumped 3.6% to $127.75 in after-hours trading in New York on the news on Wednesday.
Jewellery was one of the strongest performing areas of the luxury industry in 2018, according to consultancy Bain & Co, which forecast that comparable sales in the $20bn global market were set to grow 7% in 2019.
Tiffany, founded in New York in 1837 and featured in the 1961 movie Breakfast at Tiffany’s starring Audrey Hepburn, had struggled with falling annual sales and profit since 2015, before a revenue turnaround in 2017.
Under CEO Alessandro Bogliolo, former head of fashion firm Diesel and a Bulgari alumnus, Tiffany has been building up its e-commerce business, and is trying to court younger shoppers with more affordable pendants and earrings and new designs.
However, LVMH believes Tiffany needs to spend more on reinventing and marketing its brands, and that it can achieve this only as a division of LVMH, according to the sources.
LVMH’s 2011 purchase of Bulgari boosted its smallest and newest business division, jewellery and watches, which also includes Hublot and Tag Heuer watches. Nonetheless, that business accounted for 9% of revenue and 7% of LVMH earnings in 2018, about only a fifth the size of its core fashion and handbag business, home to brands such as Christian Dior, Givenchy and Louis Vuitton.
Acquiring Tiffany would increase LVMH’s exposure to the bridal and diamond category, as well as to US luxury shoppers. Should there be a deal, LVMH plans to keep the Bulgari and Tiffany’s brands separate, according to one of the sources.
In recent months, Tiffany and LVMH, as well as their peers Kering and Richemont, have seen a dent in their revenue as a result of turmoil in Hong Kong, where antigovernment protests have scared off tourists and battered spending in the Chinese-ruled city.