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LVMH seals its takeover of Tiffany

Tiffany: "A jewel. But with scratches."
Tiffany: "A jewel. But with scratches."

The luxury group LVMH has prevailed at Tiffany with an offer increased by 1 billion dollars to 16 billion dollars. Now the French are facing great challenges.

This text was originally published in German and machine-translated into English.

The luxury group LVMH has reached Tiffany's destination. The group, led by CEO Bernard Arnault, secures the contract for the New York jeweler for a purchase price of 14.7 billion Euro. That's $135 a share. In the beginning, LVMH had offered $120 per share.

LVMH pays the takeover in cash. The purchase should be completed by mid-2020, the luxury group announced on Monday. The Tiffany shareholders and the competition authorities still have to give their approval after the supervisory boards of both companies have already given their approval.

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"Our goal is to continue to develop the jewel Tiffany with the dedication we have given to each of our brands," said LVMH CEO Arnault. "We look forward to ensuring that Tiffany continues to be successful over the next few centuries."

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With the acquisition of Tiffany, LVMH strengthens its presence in watches and jewelry - and attacks its rival Richemont. While the Geneva-based luxury group has a strong presence in the jewellery sector with Cartier and Van Cleef & Arpels, LVMH has a much stronger presence in clothing, accessories and fragrances with brands such as Louis Vuitton, Christian Dior and Fendi.

However, LVMH at Tiffany is facing great challenges. With an EBIT margin of almost 18%, Tiffany is less profitable than the LVMH jewelry brand Bulgari with 21% and the Richemont brands Van Cleef & Arpels and Cartier with 30% and 34%, respectively. This is due, among other things, to the many of our own shops. Tiffany has 321 stores, 95 of which are located in the USA. That is more than three times as much as Bulgari, Van Cleef & Arpels and Cartier have in the region. In addition, Tiffany has a large number of products in entry-level price ranges. According to the UBS bank, they account for 40% of the product range.

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The current Tiffany CEO Alessandro Bogliolo, who came from Sportswear brand Diesel, is trying to position the Tiffany brand higher. He ensnares young customers, has introduced a new store concept and talks about wanting to become the "luxury jeweler of the next generation". "As part of the LVMH Group, Tiffany will reach new heights," said Bogliolo.