LVMH explores potential takeover of Tiffany in US luxury push


  • Retail
  • Monday, 28 Oct 2019

VIP visitor: Trump holding a purse as Louis Vuitton’s CEO Michael Burke and chairman and CEO of Luxury goods group LVMH Bernard Arnault (right) look on during a visit to the Louis Vuitton Rochambeau Ranch leather workshop in Keene, Texas recently. — Reuters

NEW YORK: LVMH, the French owner of Louis Vuitton, is exploring a takeover of Tiffany & Co to expand in the US jewellery market, according to sources.

The luxury group is holding talks with Tiffany, though there’s no guarantee an agreement will be reached, said the sources. Tiffany’s shares have gained 22% this year, valuing it at US$12bil. LVMH has risen 49%, giving it a market capitalisation of about US$215bil.

An acquisition of Tiffany would be the biggest ever by LVMH, higher than the US$7bil it paid for the rest of Christian Dior in 2017, and potentially among the largest deals by a European company this year. It would be chairman Bernard Arnault’s first major transaction since the purchase of luxury hotel chain Belmond last year.

A deal would further diversify the conglomerate, which has been riding a wave of luxury demand in China but faces risks including that country’s trade war with the United States and the anti-Beijing protests in Hong Kong – now in their sixth month.

The company nonetheless beat analysts’ estimates with a 19% sales gain for its key fashion and leather business in the most recent quarter.

With brands ranging from cosmetics retailer Sephora and Hublot watches to Hennessy cognac to Dom Perignon champagne, LVMH is looking to sharpen its focus further on the United States, the company’s second-largest region by revenue behind Asia.

Earlier this month, it opened a new Louis Vuitton factory in Texas in a ceremony that included President Donald Trump and his daughter Ivanka.

In jewellery, however, the company isn’t as dominant. The company owns Bulgari, but Swiss rival Richemont SA has Cartier as well as Van Cleef & Arpels. Adding Tiffany would broaden LVMH’s scope. While Bulgari makes a watch costing almost 2 million euros (US$2.2mil), Tiffany is better known for engagement rings that might cost a couple months’ pay.

LVMH’s nine-month figures show growth in the watches and jewellery division is slower than all the company’s other units, with fashion and leather goods leading the way.

Global names dominate categories like high-end watches and handbags, but consumers haven’t historically thought about the brands behind their diamond pendants and gold hoops. A study by consultancy McKinsey found that brands made up only 20% of the jewelry market in 2014 – a figure it expects to double by 2020.

Tiffany has been bouncing back under CEO Alessandro Bogliolo, revamping its New York flagship store with major investments targeting younger shoppers. — Bloomberg

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