Why an LVMH-Tiffany Deal Makes Sense
This week, everyone will be talking about Virgil Abloh's collaboration with Ikea, LVMH's play for Tiffany, Hedi Slimane's first fragrance collection for Celine and Halloween's spooky fashion moment. Get your BoF Professional Cheat Sheet here.
- LVMH has approached Tiffany about a potential takeover, according to media reports
- A deal would boost LVMH’s presence in the US and in hard luxury
- Tiffany shares are up 22 percent this year; the company has a market capitalisation of $11.9 billion
It looks like fashion’s M&A dry spell is over. LVMH is reportedly pursuing a play for Tiffany, which would bolt on the US jewellery maker’s $4.4 billion in annual sales to its already considerable holdings. LVMH’s last major investment in hard luxury, its 2011 acquisition of Bulgari, has performed well for the luxury conglomerate, and Tiffany will add a broader customer base, both in terms of geography (the brand generates about half its sales in the US and has seen surging sales in China) and customer base (Tiffany products straddle the high-low divide). At the same time, Tiffany could use a larger parent to navigate the US-China trade war, which has hurt sales to tourists in the US, and expand in categories like watches.
The Bottom Line: Richemont is the obvious loser if LVMH snaps up Tiffany, as it would have a much stronger challenger in hard luxury.