Louis Vuitton acquires Tiffany & Co for £12.6bn

International | Latest News | Mergers & Acquisitions | Retail

The world’s largest luxury goods company, Moët Hennessy Louis Vuitton (LVMH), has announced that it has acquired US-based jewellery giant Tiffany & Co for £12.6bn.

The acquisition of Tiffany & Co will strengthen LVMH’s position in the global jewellery industry and further increase its presence in the United States. This deal also gives LVMH’s billionaire owner Bernard Arnault a larger proportion of one of the fastest-growing luxury sectors in the US and Europe.

This acquisition is the largest in the history of LVMH, which acquired the Bulgari fashion brand for £4bn in 2011.

Founded in 1837, LVMH employs more than 150,000 people and operates about 4500 stores across the world, and has brands such as Tag Heuer, Moet & Chandon, and Christian Dior under its leading brand.

Bernard Arnault, Chairman and Chief Executive Officer of LVMH, commented: “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.”

Roger N. Farah, Chairman of the Board of Directors of Tiffany, commented, “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.”

Industry reaction

Vivek Daga, VP, Country Head, UK and Ireland at Cognizant

 To be successful in today’s competitive retail industry luxury brands need to grow and scale. But opening stores internationally is no longer enough. As a result, we are seeing more and more well-known labels merging, as with LVMH’s acquisition of Tiffany announced today.

There are already numerous examples of brand consolidation across the luxury market, for example, Louis Vuitton and YSL are both now owned by LVMH and Kering and Michael Kors purchased Versace for $2bn last year. This consolidation is a growing trend as it helps to provide easier access to products, greater experiences through digitisation and better product guidance through brand integration for consumers. Consolidation also has benefits for both the acquiring and the acquired. For the acquiring, there is often a need to rejuvenate and increase relevancy through new brands, whether they are emerging luxury players or more established and iconic luxury brands. For the acquired, there is frequent pressure to grow and scale, including expanding their footprint and penetrating new markets, which is not possible when given finite resources, distribution channels and supply chain.

Nevertheless, these new conglomerates need to be careful when communicating the integrated brand vision, not to compromise the authenticity and integrity that made the original brands successful in the first place. It is essential to strike the right balance between growth and brand integrity – particularly exclusivity and uncompromising quality. Design and customer experience are the essential ingredients of luxury brands – not the price point.

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