Last Thursday, I had an interesting zoom event with BoF Professional LIVE about unpacking the LVMH-Tiffany saga. The largest acquisition in the history of the luxury goods sector had collapsed, setting up what could be the industry’s biggest M&A battle of all time. Experts to laid out what could happen next and they were pretty right. Robert Williams, Europe Correspondent BoF; Brian Quinn, Law Department Professor, Boston College; Oliver Chen, Managing Director & Senior Equity Research Analyst, Cowen and Company; and Lauren Sherman discussed all possibilities. Interesting to know is that LVMH is part of a group of investors who, together, hold a minority interest in BoF. However, all investors have signed shareholders’ documentation guaranteeing complete editorial independence.
Such an interesting talk last week at BoF
Coming back to the luxury deal of the century. Jewelry is still a fruitful space to look for. It makes sense that LVMH wants to expand in this sector. Tiffany, that has no family shareholders, which is another advantage, is strong in the bridal sector and in China, watches are about 3%. There a lot of strategic synergies between the companies. It was unlikely that LVMH wanted to go to court where you have to be very transparent about your business. It was more likely a strategic move to get a good price, something Bernard Arnault, who built his fortune on acquiring companies, appreciates. It was the first time he wanted to get out of a deal, which could have hurt his reputation as a savvy buyer.
Today, both parties announced that they have concluded an agreement modifying certain terms of their initial agreement (the «Merger Agreement») to reflect a purchase price of $131.50 in cash and to reduce closing conditionality. Other key terms of the Merger Agreement remain unchanged. Tiffany and LVMH have also agreed to settle their pending litigation in the Delaware Chancery Court. This ends weeks of corporate fighting and saves the French luxury conglomerate over $400 million on the original price of $16.2 billion agreed before the worldwide pandemic hit. The deal is now set to close early next year, pending shareholder and regulatory approvals.
Roger N. Farah, Chairman of the Board of Directors of Tiffany, commented. «We are very pleased to have reached an agreement with LVMH at an attractive price and to now be able to proceed with the merger. The Board concluded it was in the best interests of all of our stakeholders to achieve certainty of closing.»
Bernard Arnault, President and CEO of LVMH, commented: «This balanced agreement with Tiffany’s Board allows LVMH to work on the Tiffany acquisition with confidence and resume discussions with Tiffany’s management on the integration details. We are as convinced as ever of the formidable potential of the Tiffany brand and believe that LVMH is the right home for Tiffany and its employees during this exciting next chapter.»
Congrats to the newly weds!
Photos: Courtesy of LVMH / Tiffany