LVMH Moët Hennessy Louis Vuitton is already one of the world’s biggest luxury goods empires. Now it is interested in adding yet another high-end name to its coterie of brands: Tiffany, the famous seller of engagement rings and other jewelry.
LVMH approached Tiffany & Company in recent weeks with an all-cash bid of about $120 a share, according to two people with knowledge of the matter. That values Tiffany, which has its headquarters in a famous Fifth Avenue building in Midtown Manhattan, at about $14.4 billion.
Yet even that price, which represents a nearly 22 percent premium to Tiffany’s closing share price of $98.55 on Friday, may not be enough to immediately sway the American retailer into signing a deal, these people said. The company and its advisers are still studying LVMH’s proposal, one of these people added.
That sets up the prospect of a potential takeover battle for Tiffany, which for most of its 182-year history has been known for its jewelry and other luxury goods, packaged in its signature robin’s-egg-blue boxes.
Few jewelers can claim as much of a hold on American culture as the company, famously memorialized by both Truman Capote and Audrey Hepburn in the book and movie versions of “Breakfast at Tiffany’s.”
But a battle against LVMH — the conglomerate that owns Louis Vuitton, Christian Dior, Marc Jacobs and more — would be one of the biggest challenges that Tiffany has faced in some time.
Tiffany is already grappling with relatively stagnant sales, hurt by a slowdown in tourism and worries about a drop-off in purchases by Chinese customers. (Though LVMH, as another luxury company, could also feel an effect from lower spending in China, its diverse array of brands is likely to help lessen any impact from that trend.)
For the 12 months that ended Jan. 31, Tiffany reported $586.4 million in net income, from $4.4 billion in sales.
More than two years ago, Tiffany ousted its chief executive (who had come from LVMH) after facing pressure over its lackluster financial results. Its current chief executive, Alessandro Bogliolo, has emphasized a strategy of building sales in China.
But Tiffany faces other challenges as well.
Considered more accessible than rivals like Cartier and Bulgari, it has suffered from what critics say has been a generic design profile. Though the company has been known for limited collaborations with famous designers like Elsa Peretti and Paloma Picasso and the architect Frank Gehry, they had not had a single creative in charge since the brand’s founding family.
In 2017, in an attempt to create a stronger visual identity, Reed Krakoff, the former Coach creative director who briefly ran his own eponymous luxury ready-to-wear line, was named chief artistic officer, responsible for jewelry, luxury accessories and all imagery.
To update the jeweler’s somewhat bland image, he has since introduced an “Everyday objects” collection that included a $1,000 sterling silver tin can and a $9,000 sterling ball of yarn. He also introduced an ad campaign featuring Lady Gaga, who wore the brand’s historic 128-carat Tiffany Diamond on the red carpet at the 2019 Oscars.
For LVMH, whose market capitalization as of Friday was nearly $214 billion, adding Tiffany to its portfolio would give it critical mass in its hard luxury goods arm. The American jeweler would broaden out a group of brands that includes Bulgari, Chaumet, Fred, Hublot and Tag Heuer and make it immediately more competitive with Richemont, the Swiss luxury group with a focus on watches and jewelry.
It would also give LVMH its first major non-fashion American brand.
LVMH has been busy acquiring other companies as well: Last year, it spent about $2.6 billion to take over Belmond, a luxury hotel chain, and in 2017 it paid about $13 billion to acquire a controlling stake in Dior.
But the European conglomerate has had a mixed record with American acquisitions. Its ownership of Donna Karan from 2001 to 2015 was marked with difficulty, until it closed the label’s main line and sold its DKNY diffusion line to G-III. And it has had to shelve plans to take Marc Jacobs public, after playing up the prospects of that transaction in 2013.
LVMH has been seeking to raise its profile in America recently, however. Earlier this month, it opened a new factory in Texas for Louis Vuitton, its third in the United States.
Representatives for LVMH and Tiffany declined to comment on the proposal, which was reported earlier by Bloomberg.
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