Payday for bankers as Tiffany is bought by owner of Louis Vuitton in £13 billion deal

Wall Street bankers were today set for a huge payday as the owners of Louis Vuitton have agreed to buy diamond sellers Tiffany & Co for $16.2 billion (£12.6 billion).

LVMH – which owns the Louis Vuitton, Moet and Hennesy among other luxury brands – is run by Europe’s richest man Bernard Arnault, who agreed to buy struggling Tiffany’s after hiking its offer from $120 to $135 a share. Citi and JP Morgan advised LVMH, with Ceterview and Goldman on the ticket for Tiffany.  

The takeover by Paris based LVMH, which has Europe’s richest man Bernard Arnault as its controlling shareholder, brings an end to 182 years of independence for the owner of one of New York’s most famous stores.

The jeweller, founded in 1837 by Charles Lewis Tiffany, has a network of more than 300 outlets all over the world and is known for its signature robin’s-egg blue packaging.

LVMH already has an extensive portfolio of luxury brands (MIGUEL MEDINA/AFP via Getty Images)

They include a flagship store on Old Bond Street in Mayfair, where a Tiffany Victoria mixed cluster necklace in platinum with diamonds costs £98,000.

There are also Tiffany outlets on Sloane Street, Covent Garden, Canary Wharf, Westfield London shopping mall, the Royal Exchange building in the City and Heathrow airport as well as concessions in Harrods and Selfridges.

Analysts said Tiffany had to tread carefully in holding out for a higher price, with no obvious counter-bidder in the race. The deal represents a payday for top shareholders including Vanguard, the Qatar Investment Authority and British hedge fund Egerton, which is the eighth largest shareholders.

Jefferies analyst Flavio Cereda said: “This looks a very good deal for LVMH at a fair price. The Tiffany’s blue box is iconic –the brand is better than the company so there’ll be work to do.

“I’d expect LVMH to put a greater focus on Asian and less on the US, and change the product mix. The depth of price range is enormous – you can buy some products for £20 and some for £20,000, that does not really work and it certainly does not work in Asia, it affects the perception of the brand.”

Aneta Wynimko, manager for Fidelity Global Consumer Industries fund which owns both LVMH and Tiffany, said: “I am pleased about the bid. While in many cases acquisitions end up destroying value LVMH is a business built on acquisitions that in most cases have been very successful. Once a brand joins the LVMH house it benefits form investments and know-how and eventually ends up being best in class and thus very desirable to the consumer.”   

Cereda dismissed suggestions a rise in the shares of UK listed Burberry – up 57p at 2090p today – meant a deal for the trenchcoat maker was in the offing.

Tiffany’s it is best known for the 1961 Audrey Hepburn movie Breakfast at Tiffany’s based on the Truman Capote novel of the same name. The Manhattan store on Fifth Avenue next to the Trump Tower is one of New York’s most famous retail landmarks.

The takeover is the biggest ever in the luxury goods industry and gives the world’s largest player in the sector a major new beachhead in the US market.

The $135 a share acquisition follows five weeks of intense negotiation between the two businesses after LVMH made its first approach about a takeover.

LVMH now has a total 75 brands, including Moet & Chandon, Veuve Cliquot Pnsardin, Krug, Glenmorangie, Givenchy, TAG Heuer and Bulgari. It has 156,000 employees and a network of more than 4,590 stores.

Arnault said: “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.”


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