Lv'S Largest Acquisition In The History Of Parent Company: Offer $14.5 Billion For Tiffany

Top luxury brand Tiffany may be bought.

In October 28th, according to foreign media reports, Louis Weedon (Louis Vuitton) parent company Lu Wei Ming Xuan group (LVMH) intends to buy the American jewelry brand Tiffany (Tiffany & Co.) with a price of 14 billion 500 million US dollars. If the takeover is successful, this will be the largest acquisition in the history of LVMH group.

The media quoted a person familiar with the matter as saying that LVMH had contacted Tiffany many times in the past few weeks and offered a full cash offer of $120 per share, based on which Tiffany's valuation was about $14 billion 500 million. If the two sides reach an agreement, this will be the largest acquisition by LVMH group, which will exceed the scale of the LVMH group's acquisition of Christine Dio Christian Dior in 2017 by US $7 billion.

LVMH has many high-end businesses such as Christine Dio (Christian Dior), Givenchy, watches and jewelry brands, such as Bvlgari (Bulgari) and Hublot (Hublot), to perfume, cosmetics, wine and spirits, and boutique retail.

LVMH, the world's largest luxury group, has a revenue of about $50 billion, and most of its sales depend on Chinese shoppers. CNBC, an American financial media, said that although LVMH has been doing well in the high-end retail sector in recent years, not all its brands can get the favor of the Chinese market.

On the other hand, because of the lower sales tax in China, the US jewellery brand Tiffany has reduced the purchasing power of Chinese tourists in the US and other regions. In recent quarters, sales of Tiffany in the US and Asia have declined. Tiffany executives said in August this year that the slowdown in the macroeconomic situation would have an impact on the company's profits in 2019.

The acquisition of Tiffany can increase the exposure of LVMH in jewelry industry. Jewelry is one of the fastest growing businesses in the luxury sector, according to consulting firm Bain. Data show that in 2018, the global jewellery market grew by 7% to 18 billion euros.

Some media quoted Luca Solca as saying: "Tiffany has not yet fully realized its potential, such as designing jewelry and watches," Luca Solca said. LVMH said the acquisition of Tiffany by LVMH would greatly expand the business of the US in the US, so that it could get more dollar denominated income and reduce foreign exchange risk.