LMVH to acquire iconic Tiffany's for $16.6 billion; to expand its luxury jewellery segment

French luxury brand LMVH confirmed on Monday that it has reached a deal to buy U.S. jewellery brand Tiffany & Co for a staggering $16.6 billion or $135 per share in cash. The deal was reached after Tiffany convinced LMVH, the owner of Louis Vuitton, to raise the bidding price by another $600 million.

The deal is by far the largest ever in the luxury sector and will aid LMVH in expanding it footprint in the luxury jewellery market in the United States. Following the announcement shares of LMVH jumped 1.4% on Monday.

Deal finalized at a higher value

Louis Vuitton YouTube Grab

A announcement on the deal being finalised comes a month after LMVH approached the U.S. luxury jeweller for a possible acquisition at $120 per share in cash. Tiffany, however, at that time had asked LMVH to raise the takeover offer.

The French group had last week raised the bid to $130 per share, following which it was allowed access to Tiffany's books to conduct due diligence. On Monday, the takeover offer was further raised by another $5 per share, following which the deal was finalized. The deal is expected to close in mid 2020.

LMVH to strengthen jewellery footprint in the United States

Tiffany & Co which was founded in 1837 and was known for its duck egg blue boxes, went on to become one of the most iconic luxury brands of the 20th century. However, the appeal of the brand has somewhat been fading over the past few decades.

On the other hand, LMVH, owned by Europe's richest man Bernard Arnault despite being one of the biggest luxury brands has being trying to expand its luxury watches and jewellery business lately.

Tiffany & Co YouTube Grab

LVMH and Tiffany & Co in a joint statement said, "The acquisition of Tiffany will strengthen LVMH's position in jewellery and further increase its presence in the United States."

LMVH already has a significant presence in Europe and the United States and is home to some of the biggest brands like Tag Heuer and Bulgari. However, the French luxury brand's small division is its jewellery and luxury watches segment.

Understandably, the acquisition is in a bid to strengthen its jewellery segment and explore the U.S. luxury jewellery market that is fast growing and has huge potential.