Arnault’s LVMH hunts for breakfast at Tiffany’s
It backfired for Hock Tan, but will Bernard Arnault, Europe’s richest man and the mastermind behind the world’s most powerful luxury group LVMH, have better luck?
LVMH confirmed on Monday that it had made a $14.5bn all-cash bid for US jeweller group Tiffany & Co. That makes this at least the second high-profile US corporate takeover attempt that was set in motion just as the boss behind the would-be buyer was cozying up publicly to President Donald Trump.
Recall that Tan, chief executive of Broadcom, was secretly making a move on chipmaker Qualcomm as he declared in the White House next to Trump that his company was moving its legal base and headquarters back to the US. Despite the charm offensive, Tan’s bid ended in disaster and humiliation, with the US government blocking Broadcom in brutal fashion.
Enter Arnault, below left. The aptly nicknamed “wolf in cashmere” appeared in Texas with Trump to inaugurate a new workshop where LVMH’s Louis Vuitton would create 1,000 jobs and make “IN THE USA” its famous monogrammed handbags. It raised eyebrows in fashion circles, but it was chalked up to pandering-as-usual to America’s ego-in-chief, who called the brand “Looie VOO-ton” and joked that it had “cost me a lot of money over the years”.
Little did we know that on October 15, Arnault had submitted an offer letter for the US jewellery brand that Trump reportedly named one of his daughters after. That may explain the smirk on his face above.
The $120 per share bid valued Tiffany, which was immortalised in the 1961 film Breakfast at Tiffany’s, at $14.9bn including debt. The Arnault camp is claiming that’s a 33 per cent premium to the company’s undisturbed share price.
The problem for them is that — somehow, magically, shares in Tiffany soared in the back half of last week — which makes the price he offered two weeks ago look lighter than it was.
Their bid was flushed out over the weekend after having not heard back from the Tiffany board. LVMH put out a terse statement on Monday morning referring to preliminary discussions. Tiffany responded by confirming receipt of an offer from “LMVH” or as Alphaville joked Louis Mutton Voet Hennessy and said it is not in talks with any party.
We are journalists at DD and therefore sympathetic to the odd typo. What to do when your ultra-pricey external communications and in-house comms team makes the mistake? Below you can see the original press release which was later corrected. (Also, not a vote of confidence for those using the inscriptions services at Tiffany.)
A takeover fight with Arnault is typically the stuff of legend. Earlier this year, we held an entire retrospective as part of the Due Diligence Forum in London on the time he tried (unsuccessfully) to buy Gucci. Interestingly, Skadden Arps — the law firm that helped defend Gucci back then — is now working with LVMH.
The lesson from that battle and other Arnault fights is that, when the billionaire sets his sights on a target, he rarely loses. And in the instances where he doesn’t get exactly what he wants, he still finds a way to make money from the situation. With that in mind, Tiffany’s defence advisers have more than spelling mistakes to worry about.