France’s LVMH secures deal to buy Tiffany for $16.2 billion

PARIS (AP) — French luxury group LVMH has agreed to buy iconic New York jeweler Tiffany & Co. for $16.2 billion, adding a famed star to its portfolio that already boasts Louis Vuitton, Christian Dior and Bulgari.

LVMH announced in a statement Monday that it will purchase the 182-year-old Tiffany and its 300 boutiques worldwide at $135 a share. The agreed deal is higher than the $14.5 billion cash offer LVMH made last month.

Tiffany — known for its delicate jewelry, distinctive blue boxes and an Audrey Hepburn movie — says the deal will ensure its long-term sustainability. Tiffany, which is trying to transform its brand to appeal to younger and more digital shoppers, could use a company with deep pockets to help expand its business.

LVMH’s share price rose on the announcement, trading Monday up 2 percent at 403.50 euros.

Paris-based LVMH, led by billionaire Bernard Arnault, says the deal will strengthen its position in high-end jewelry and in the U.S. market. The purchase gives the French conglomerate a new star in its already distinctive portfolio — one that will help it compete with Gucci-owner Kering Group and Cartier-owner Richemont SA.

6 PHOTOS
Tiffany & Co. Holiday Windows through the years
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Tiffany & Co. Holiday Windows through the years
NEW YORK, NY - NOVEMBER 26: An exterior view of Tiffany's window display on fifth avenue during the 2014 holiday season on November 26, 2014 in New York City. (Photo by Neilson Barnard/Getty Images)
NEW YORK, NY - DECEMBER 11: A general view of the Tiffany & Co seasonal Holiday windows on December 11, 2013 in New York City. (Photo by Ben Hider/Getty Images)
NEW YORK, NY - DECEMBER 05: Christmas decorations of the Tiffany's store at the 5th Avenue on December 5, 2012 in New York City. Christmas holiday season in New York is the most wonderful time of the year. NYC with it's lights, Christmas trees, window shopping, holiday events and performances is a pretty spectacular sight. (Photo by Franco Origlia/Getty Images)
The windows of the Tiffany and Co. flagship store on Fifth Avenue in Midtown Manhattan on Black Friday, November 26, 2010. Despite the strong dollar Tiffany & Co. reported fourth-quarter profits that beat analysts' expectations. (© Richard B. Levine) (Photo by Richard Levine/Corbis via Getty Images)
NEW YORK - NOVEMBER 17: Tiffany's Holidays store windows designed by Robert Rofino photographed on November 17, 2007 in New York City. (Photo by Joe Kohen/WireImage) *** Local Caption ***
NEW YORK - NOVEMBER 17: A Tiffany christmas window is displayed at the UNICEF 2007 Snowflake Lighting at Tiffany November 17, 2007 in New York City. (Photo by Steven A. Henry/Getty Images)
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LVMH already owns 75 brands including Christian Dior, Fendi, and Givenchy as well as watchmaker Tag Heuer. Its flagship brand Louis Vuitton recently opened a handbag workshop in Texas, with President Donald Trump in attendance.

LVMH said both companies' boards approved the deal and hope to finalize the takeover in 2020, subject to the approval of regulators and Tiffany shareholders.

The offer comes as luxury goods companies have been wrestling with changing habits of shoppers who are increasingly buying online. They're also purchasing second-hand luxury items from places like The RealReal.com.

In addition, luxury companies are facing fears of an economic slowdown in China, a key area of business, while they're already dealing with a slowdown in international tourism in the U.S.

Under its CEO Alessandro Bogliolo, Tiffany is trying to appeal to younger shoppers with more modern takes on jewelry. Earlier this year, it launched a men's jewelry collection, and it's increasing its marketing to a more diverse customer base like same-sex couples. It's also been renovating its flagship store in Manhattan.

Still, Tiffany's U.S. sales have been stagnating as China's slowing economy has weighed on spending by Chinese tourists, who make up a substantial portion of luxury spending. The strong dollar has also made Tiffany products more expensive for consumers outside the U.S.

Tiffany has been putting plans in place to appeal to a younger group of customers who are more used to shopping online and hunting for fashion deals. Tiffany has notably highlighted ways customers can personalize jewelry and started letting people trace the origin of their diamonds.

Tiffany had sales of $4.4 billion in 2018, an increase of nearly 7% over 2017. LVMH reported 6.3 billion euros in profits in 2018 on 46.8 billion euros in sales.

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