CEO Bogliolo: Tiffany will reach new heights in the LVMH deal

Tiffany´s CEO Alessandro Bogliolo thinks the merge with the French luxury group LVMH will help the company to reach new heights. He commented the merge deal in the company press release yesterday.

-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. As part of the LVMH group, Tiffany will reach new heights, capitalizing on its remarkable internal expertise, unparalleled craftsmanship and strong cultural values, Mr Bogliolo said.

The takeover deal was well managed. According to Financial Times, the LVMH CEO Bernard Arnault visited the US in the opening ceremony of the Louis Vuitton leather production plant in Texas in October. The US President Donald Trump was also one of the firsts to know of the acquisition, although no names was mentioned to him, Mr Arnault told the FT reporter yesterday of that Texas-event.

And the business circles are small in the luxury business. For example the CEO of Tiffany, Mr Bogliolo is also a known-person to LVMH from his earlier carrier as a senior position at the Italian fashion house Bulgari, now part of the French luxury group.

The Tiffany takeover or LVMH´s Christmas present is the biggest deal for the company. According to Bloomberg Opinion the deal values the Tiffany about 16 times Ebitda, which is nice compared to the earlier deals in the industry. According to Bloomberg data, the LVMH purchase of Bulgari in 2011, the valuation was 23-24 times, as was the Swiss company´s Swatch purchase of Harry Winston in 2013.

So, what is going to happen next? Will the mergers and acquisitions trend in the luxury business continue? Sure. And all luxury companies are heading to Asia. It is also expected that LVMH will increase the Tiffayny´s presence in the Asian markets and find the best locations for the high-end consumers of Tiffany. All studies show that the biggest growth for luxury brands is coming from Asian consumers in the coming years.

As Mr Arnault told the Financial Times, LVMH is increasing the desirability of the Tiffany brand.

– My goal with Tiffany -as it is for Louis Vuitton or Dior – is that desirability for the brand should be higher in 10 years time than it is right now, he said in the FT interview.

The announced deal will increase the other major luxury brands interest to join the growth race. The French rival Kering, with brands like Gucci, Saint Laurent and Bottega Veneta and the Swiss Richemont, with brands like Cartier, IWC and Piaget, are in the line.

The stock markets have also seen the increase of interest and for example nearly all the major luxury companies were trading up on Tuesday in the Tiffany aftermatch.

LVMH was trading up 0,77 % at 407 euros, Tiffany slightly up 0,01 % to 133 dollars, Kering (KER) up 0,40 % at 546 euros and the UK Burberry (BRBY) up 0,24 % to 2093 pounds. Only the Swiss Richemont (CFR) was trading down, 0,57 % at 76 Swiss francs.

Picture: Luxury watches from LVMH Group: Hublot Big Bang, Tag Heuer, Bulgari

Business Finance Lifestyle

LVMH to buy Tiffany – shares up

The French luxury group LVMH Moët Hennessy Louis Vuitton SE (MC) and the US jeweler Tiffany & Co. (NYSE: TIF), have today announced that the companies have entered into a definitive agreement.

This means that LVMH (MC) will acquire Tiffany for $135 per share in cash, in a transaction with an equity value of approximately €14.7 billion or $16.2 billion.

Tiffany´s share is trading at 133,02 dollars, up 5,98 % and LVMH´s at 402,20 euros, up 1,50 %.

According to the Tiffany´s and LVMH´s joint press release, the acquisition of Tiffany will strengthen LVMH’s position in jewelry and further increase its presence in the United States. The addition of Tiffany will transform LVMH’s Watches & Jewelry division and complement LVMH’s 75 distinguished Houses.

-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, Bernard Arnault, the chairman and CEO of LVMH said in the release.

– 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, Roger Farah, chairman of the Board of Directors of Tiffany, said.

According to the release, the transaction is expected to close in the middle of 2020 and is subject to customary closing conditions, including approval from Tiffany’s shareholders and the receipt of regulatory approvals.

 

Business Finance Tech Travel