French fashion boutique group Louis Vuitton (LV) recently offered US$14.5 billion to acquire American jeweler Tiffany. This is the largest acquisition in LV’s history. LV can borrow This expands business scope in the United States. LV confirmed that the two parties have held preliminary discussions on a possible transaction.
Tiffany, headquartered in New York, has a market value of nearly US$12 billion. LV has a market value of US$214 billion (equivalent to 193 billion euros). According to Bain&Co data, the global jewelry market grew by 7% in 2018 and was worth approximately US$19.96 billion. Tiffany, like Cartier and Louis Vuitton’s Bulgari, is one of the world’s largest jewelers, but it has been unable to keep pace with its European rivals.
Tiffany, with annual revenue of approximately US$4 billion, has been struggling with weak sales growth for many years. The 182-year-old brand has been trying to rebuild its business after replacing its chief executive two years ago amid pressure from investors. Under the current CEO’s plan, Tiffany has expanded its business to China and plans to open flagship stores in several major cities. The company still relies heavily on tourist spending in the U.S. market and frequently renovates its Fifth Avenue flagship store in New York. Tiffany is also trying to increase its market appeal to expand its customer base and add new products for young shoppers. It also launched a men’s jewelry line.
But Tiffany’s sales have declined in the United States and Asia in recent quarters. Chinese consumers’ purchases of high-quality goods account for about one-third of global purchases of luxury goods. However, as China’s economic slowdown and intensified trade tensions reduce consumer confidence in China, luxury goods companies have come under a lot of pressure.
LV’s annual revenue is approximately US$50 billion, and most of its sales rely on Chinese consumers. However, due to the group’s considerable size and its numerous brands, from boutique Louis Vuitton to Champagne Dom Dom Pérignon, it has performed better than Tiffany in recent years. Its revenue has also grown significantly in the latest quarter, with little impact from the anti-extradition protests in Hong Kong or the U.S.-China trade war. LV, which has created a luxury kingdom through mergers and acquisitions, spent approximately US$13.305 billion to acquire Christian Dior fashion company in 2017.
