Industry Update
Opinion Article 5 November 2019

Bernard Arnault Falls in Love with Tiffany!

LMVH is using M&A as a key lever to accelerate growth and strengthen its leadership position in the global luxury market.

By Florent Girardin, Assistant Professor of Marketing at Ecole hôtelière de Lausanne

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Press speculation about a non-binding takeover approach by LVMH for Tiffany & Co was confirmed by both parties on 28 October 2019.


The French luxury goods supplier made a proposal to launch an offer for all the shares in the NASDAQ-listed luxury jewellery maker at $120 per share, a premium of 22% over the closing share price of last Friday. This would represent a total value for 100% of the shares of $14.5 billion and a ratio of 26.7 times Tiffany's last twelve months earnings to September 2019.

Should this offer be successful, this would become LVMH's largest acquisition ever, less than a year after the $3.2 billion acquisition of luxury hotel group Belmond, 2 years after the €6.5 billion acquisition of Christian Dior Couture as part of a group reorganisation, and 8 years after the acquisition of Italian jewellery manufacturer Bulgari for €3.8 billion.

Clearly, LMVH is using M&A as a key lever to accelerate growth and strengthen its leadership position in the global luxury market. And with a market capitalization of approximately €200 billion, profit from recurring operations of €10 billion in 2018, a limited amount of debt on its balance sheet and a share trading at 29.2 times net earnings, the French group has ample resources and options available to finance deals.

From a strategic point of view, the acquisition would reinforce LVMHs' presence in the luxury jewellery market, a market estimated at €18 billion in 2018. Currently Richemont Group, which owns the brands Cartier, Van Cleef & Arpels and Buccellati, is dominating the luxury jewellery market with sales of €5 billion in their fiscal year 2019. Because approximately 40% of Tiffany & Co worldwide net sales come from the United States, LVMH would also be able to further penetrate this important geographical market, which represents only 9% of its current revenue in its Watches & Jewellery business group. As the U.S. market is the second biggest market for luxury jewellery after China, the acquisition of Tiffany and Co would clearly be a smart move for LVMH to grow its jewellery business worldwide.

It is also worth noting that Tiffany and Co is an iconic brand, occupying the 94th rank in Top 100 Best Global Brands 2019 Rankings, with a brand value estimated at $5.3 billion. Thanks to a clear brand positioning, Tiffany and Co is particularly well differentiated from its competitors. With the help of young celebrities' endorsement (e.g. Elle Fanning), it has gone recently through a successful rebranding process to be perceived as a "cool" brand to target millennials, a growing segment of luxury consumers.

As a result, Tiffany and Co has achieved strong consumer-brand identification and is perceived as a relevant brand from consumers with diverse geographical and demographical characteristics. From 2001 to 2015, Tiffany and Co's brand value has constantly increased, going from $3.5 billion in 2001 to a highest value of $6.3 billion in 2015. However, the brand value has decreased since 2015 and experienced a 5% decline between 2018 and 2019. Without any doubt, the expertise of LVMH in driving luxury brands would help Tiffany and Co brand value to increase again in the future. Indeed, Louis Vuitton is the most valuable luxury brand, ranking 17th on the Best Global Brands 2019 rankings, with a value of more than $32 billion and a positive growth of 14% since last year.

However, LVMH still needs to convince Tiffany's directors and shareholders (mostly institutional investors) of the benefits of its prospective offer.

As it stands, there remains some work to do: the board of Tiffany confirmed the approach was unsolicited and Tiffany's share price jumped by 30% , well above LMVH's proposed offer price. Other global luxury players may decide to enter the party and submit competing proposals.

The game is on!


  • Bain & Company, 2018, Luxury Goods Worldwide Market Study, Fall-Winter 2018.
  • Interbrand, 2019, Best Global Brands 2019 Rankings.
  • LVMH, 2018, LVMH 2018 Annual Report.
  • Tiffany and Co, 2018, Tiffany and Co 2018 annual Report.
  • Richemont, 2019, Richemont Annual Report and Accounts 2019.

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Florent Girardin

Dr. Florent Girardin is an assistant professor of marketing at Ecole hôteliere de Lausanne. His research interests include brand authenticity and luxury branding. He also teaches an undergraduate course on hospitality luxury brand management.

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