Merger Monday: LVMH to Buy Tiffany for US$16 Billion

International luxury group Moët Hennessy Louis Vuitton (LVMH) (OTC Pink:LVMHF,EPA:MC) will add another illustrious brand under its banner through the acquisition of renowned jewelry house Tiffany & Co. (NYSE:TIF).

The acquisition, which is now the largest luxury goods deal in history, will see LVMH pay US$135 per share (US$16.2 billion) for the company, which has made robin egg blue synonymous with diamonds and opulence.

In the announcement, LVMH, which owns powerhouse brands like Sephora and Christian Dior as well as extreme high end jewelry brands Bulgari and TAG Heuer, expressed its pleasure with adding the New York-based retailer under its umbrella.

Citing Tiffany’s long history and dedication to craftsmanship, the French mega brand credited Tiffany with becoming “synonymous with elegance” and reshaping how millions of people defined displays of love and marriage.

 “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,” said Bernard Arnault, chairman and CEO of LVMH. “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.”

With 75 houses  encompassed under its brand, LVMH is the largest luxury goods conglomerate in the world. Earlier this year, the multinational company announced it would partner with Rihanna on a new Paris-based house called Fenty, focused on ready to wear, shoes and accessories.

Tiffany made headlines earlier this month when it released an exclusive 12 gift holiday guide, a first in the company’s 182 year history. Among the luxury items was a limited-edition advent calendar featuring 24 gifts ranging from signature bracelets to silver cups.

Diamond retailers and miners have been struggling in an oversupplied market that has seen purchases decrease.

In its Q2 results, Tiffany reported a 3 percent decline in worldwide sales and a 6 percent drop in net earnings. The board agreed on the multi-billion deal, which had been in the works for weeks after a strategic review that included external consultation.

“Tiffany has been focused on executing on our key strategic priorities to drive sustainable long-term growth. This transaction, which occurs at a time of internal transformation for our legendary brand, will provide further support, resources and momentum for those priorities as we evolve towards becoming The Next Generation Luxury Jeweler,” said Alessandro Bogliolo, CEO of Tiffany.

The acquisition is expected to be finalized in mid-2020 and is subject to regulatory approval.

Shares of LVMH were steady on Monday, trading for 404.10 euros. Tiffany shares climbed 6 percent to sell for US$133.46.

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Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.