LVMH close to buying Tiffany for more than $16.3 bln

LVMH close to buying Tiffany for more than $16.3 bln

LVMH close to buying Tiffany for more than $16.3 bln

A Tiffany shop on the Champs-Élysées in Paris, on November 25, 2019.

French luxury giant LVMH Moët Hennessy Louis Vuitton said Monday it has reached a deal to buy US -based jewelry legend Tiffany & Co. for $16.2 billion.

Amazon CEO Jeff Bezos could lose his title as the richest person in the world this week after LVMH CEO Bernard Arnault signed to buy the jewellery giant Tiffany for US$16 billion (NZ$24 billion). Both companies did not immediately respond to requests for comment.

LVMH shares rose 2.3 percent to stand at 405.30 euros in midday trading in Paris.

The acquisition of the 182-year-old Tiffany enhances LVMH's positioning in the luxury jewelry category, where its dominant brands are Bulgari and Tag Heuer.

LVMH's portfolio consists of 75 brands including Christian Dior, Louis Vuitton, and Hennessy.

Tiffany reportedly entered preliminary discussions with LVMH and asked the company to up the bid, which it raised to $130 per share. They've traded steadily above the initial offer price since Bloomberg News first reported the talks late last month.

Forbe's "Real-Time Billionaires List", which tracks the net worth of the richest people in the world, placed Gates at $107 billion and Bezos at $110.2 billion on Monday.

LVMH expects the addition of Tiffany to strengthen its position in the jewelry market and bolster its presence in the United States, the company said in a press release about the acquisition.

"It is also a bet on China's economy and its consumers, whose fast-rising incomes have made them the luxury industry's most important customers".

LVMH's official courtship of Tiffany lasted about five weeks after a first approach of $120 per share in mid October.

It said that LVMH plans to leverage Tiffany's heritage and brand awareness, iconic collections, and commitment to sustainable sourcing and traceable provenance, and will "accelerate [its] ongoing strategy as part of LVMH". Beyond this, there are no details yet on what this will mean for watch sales at Tiffany & Co.'s massive retailer network and how it may or may not change up the lineup of watchmakers available at Tiffany & Co. outlets. The company gets about 44% of its revenue from the Americas and 43% from Asia.

The acquisition positions LVMH, the world's biggest luxury conglomerate, squarely on the turf occupied by its rival Richemont, the owner of Cartier.

Citi and J.P. Morgan serve as financial advisors to LVMH while New York-based law firm Skadden, Arps, Slate, Meagher & Flom serves as legal counsel.

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