On Monday 28th October, LVMH (Moët Hennessy Louis Vuitton), one of the world’s biggest luxury conglomerate announced its highest bid to acquire New York Luxury Jewelry Giant Tiffany & Co. at a valuation of $14.4 billion. Speculators doubt whether Tiffany with 185 years of culture and history, let itself go under the sleeve of a European conglomerate or stand ground and compete.
Speculation has already affected the stock market with traders bidding on higher terms. LVMH has offered to pay $122 per share in cash, which is a 22% premium on Tiffany’s closing share price of $98.55 before the announcement.
Who says, “News Does not influence Stock Market”?
Tiffany’s premium stock price is rapidly rising with the NEWS spreading across the market at $126.99 (3.59 PM EDT), which is nearly 29% more than before the announcement. When it comes to Jewelry – Louis Vuitton acquired BVLGARI (Bulgari) in 2011 – a brand in direct competition with Tiffany with the deal valued at $5.2 billion. If Louis Vuitton acquires Tiffany, it will boost and diversify its portfolio with regards to Fine Jewelry and Watches categories.
What if Louis Vuitton buys Tiffany?
Here are the Top 8 takeaways that we think will happen if the deal goes through.
1) BVLGARI and Tiffany (Jewelry Brands) may collaborate rather than compete, complementing each other’s strength in the jewelry category. Or, they might stay put with their current market positioning with an already established set of the customer base.
2) Tiffany will be at an advantage for smoothly expanding its customer base to the European Market with the help of the French Conglomerate.
3) Marketing Outcomes will multiply and have a synergy effect.
4) LVMH’s array of Brand assortment might help balance the impact of the slow sales growth rate of Tiffany in recent years.
5) LVMH’s market capitalization of $214 billion will gain additional weight with the acquisition of Tiffany.
6) LVMH’s Jewelry Category business will surge against its current Heavyweight categories – Fashion and Leather Goods.
7) LVMH will have to pay a premium price. The stock price of Tiffany surged a whopping 29% after the acquisition announcement. (From $98 to $127)
8) LVMH will add its first non-fashion American Brand into its portfolio.
However, if Tiffany opts out – it will speak out loud from a famous Joker Quote – “It’s not about money, it’s about sending a message”.
A message that will resonate volumes – Tiffany will not compromise for its iconic heritage!