LVMH buys Tiffany for $15.8 billion
“LVMH agreed to buy Tiffany for $16.2 billion in November 2019, tried to leave in the pandemic, was sued in Delaware, and closed on 7 January 2021 at $131.50 a share, about $15.8 billion.”
On 15 October 2019 Antonio Belloni, a top executive of the French luxury group LVMH, took Tiffany's chief executive, Alessandro Bogliolo, to lunch and handed him a letter. LVMH, owner of Louis Vuitton, Dior, Sephora and Moët & Chandon, wanted to buy the New York jeweller for $120 a share in cash, about $14.5 billion by the press's count. Tiffany's shares had closed that day at $91.04. Tiffany had been founded in 1837 by Charles Lewis Tiffany as a stationery and fancy-goods shop on Broadway, and by 2019 LVMH itself called it the leading luxury brand to come from the United States, with its pale blue box and its Fifth Avenue flagship at 57th Street, where the Tiffany Diamond is displayed. LVMH wanted to be bigger in jewellery and bigger in the United States.
Tiffany's board said $120 was too low. In five weeks the offer went to $125 (turned down), then $130, which was enough for Tiffany to open its books, and finally $135, with LVMH accepting a clause that bound it to fight for any regulator's approval. The agreement was signed on the evening of 24 November 2019 and announced the next morning: $135 in cash, an equity value of about $16.2 billion, which the press called the largest deal ever in luxury. Tiffany's shareholders approved it on 4 February 2020 by 99.3% of the votes cast.
Then came the pandemic. Shops closed, Tiffany's shares fell to $104, 23% under the agreed price, and by June reports said LVMH's chairman, Bernard Arnault, was looking for a way to pay less. The deal's long-stop date was 24 August 2020, which Tiffany extended to 24 November, and LVMH disputed that. On 31 August the French foreign minister, Jean-Yves Le Drian, wrote to LVMH that it should delay closing until 6 January 2021, because France was trying to stop new American tariffs on French goods. On 9 September LVMH said it could not complete the deal, and Tiffany sued the same day in the Delaware Court of Chancery. LVMH answered on 28 September, claiming a 'material adverse effect' (the agreement had no exception for a pandemic), that Tiffany had run itself badly, and that the French letter stood in the way. The court refused a trial before the deadline but set one for 5 January 2021.
The trial never took place. After two weeks of talks between intermediaries, the two sides signed an amended agreement on 28 October 2020: $131.50 a share, about $15.8 billion, roughly $425 million less, in return for LVMH giving up the clauses it had used as exits, the 'material adverse effect' and the government-order conditions, and for both sides dropping their lawsuits. Tiffany's shareholders approved the new price on 30 December, and the deal closed on 7 January 2021, the first day the French letter allowed. No court ever decided whether the pandemic was a 'material adverse effect'.
The same day the new owners took over: Anthony Ledru became chief executive, Michael Burke, head of Louis Vuitton, chairman, and Alexandre Arnault, Bernard Arnault's son, executive vice president for product and communications. Bogliolo left. On 23 August 2021 Tiffany showed its first campaign of the new era, 'About Love', with Beyoncé and Jay-Z; Beyoncé wore the 128.54-carat Tiffany Diamond, shown in an advertisement for the first time, in front of a Basquiat painting, and the campaign promised $2 million to students at historically Black colleges. The deal is also a case of a buyer trying to walk away from a signed price and ending up paying about $425 million less, but still paying.
What happened
- 2019
At a lunch he had not been told the subject of, Tiffany's chief executive Alessandro Bogliolo is handed a letter by LVMH's Antonio Belloni: an unsolicited, non-binding offer to buy all of Tiffany for $120 a share in cash, 32% above that day's close of $91.04. LVMH wants an answer by 23 October. The chairman, Roger Farah, is told the same day.
Two days later Bernard Arnault is in Alvarado, Texas, touring Louis Vuitton's new workshop with President Trump: the American side of LVMH's business is already growing, and Tiffany's board is meeting about the offer.
Alvarado, Texas: site of Louis Vuitton's Rochambeau workshop, where Bernard Arnault stood with President Trump on 17 October 2019After media report 'roughly $120 a share' on 26 October, LVMH confirms 'preliminary discussions' and Tiffany confirms an unsolicited, non-binding $120 proposal, saying the board is reviewing it. Tiffany's shares close at $129.72, against $98.55 on the last trading day before the leak, a rise of 32% and above the offer, so investors expect more. Bloomberg puts the offer at $14.5 billion.
Tiffany & Co.'s flagship, 727 Fifth Avenue at East 57th Street, New York: the shop LVMH bought, under renovation from January 2020The board, advised by Centerview and Goldman Sachs, decides $120 is too low. Farah tells Belloni there will be no real talks at that price. On 6 November LVMH floats $125 in return for access to the books; Tiffany says that is not enough.
Tiffany & Co.'s flagship, 727 Fifth Avenue at East 57th Street, New York: the shop LVMH bought, under renovation from January 2020Belloni says LVMH can go to $130 if it may start due diligence. On 15 November the board agrees to open the books but without exclusivity, expecting the final price to be higher; on 19 November the two sign a confidentiality agreement and Tiffany opens a data room, and on 20 November Bogliolo and the finance chief present to LVMH.
After a day of calls between the banks, LVMH goes from $131 to $133 and then to $135, its last offer: it says it will walk away if Tiffany does not agree. Farah says he will argue for it to the board; Belloni formally offers $135.
On a Sunday, Tiffany's board, with Trapani, a former LVMH executive, kept out of the vote, approves the merger after Centerview and Goldman Sachs call $135 fair. In the morning Belloni has agreed to a 'hell-or-high-water' clause, obliging LVMH to do whatever regulators ask; the agreement is signed that evening. It sets 24 August 2020 as the long-stop date, extendable to 24 November.
Tiffany & Co.'s flagship, 727 Fifth Avenue at East 57th Street, New York: the shop LVMH bought, under renovation from January 2020LVMH and Tiffany announce the deal: $135 a share in cash, an equity value of about €14.7 billion or $16.2 billion, closing expected by mid-2020. Bloomberg calls it the largest luxury-goods deal ever. Arnault promises to develop 'this jewel with the same dedication' as every LVMH house; the release names the Tiffany Blue Box as an icon.
Tiffany & Co.'s flagship, 727 Fifth Avenue at East 57th Street, New York: the shop LVMH bought, under renovation from January 2020- 2020
At a special meeting Tiffany's shareholders adopt the merger: 99.3% of the votes cast, which is more than 71% of all the shares. The US antitrust waiting period had ended the day before.
Tiffany & Co.'s flagship, 727 Fifth Avenue at East 57th Street, New York: the shop LVMH bought, under renovation from January 2020The pandemic is declared on 11 March and the US bars travellers from Europe; Tiffany's shares drop as low as $104, 23% under the agreed price. On 17 March LVMH asks Tiffany for permission to buy shares in the market; on 23 March it says it recalls that it is committed not to.
LVMH, 22 avenue Montaigne, Paris: the group's address in Tiffany's proxy statementsAfter reports that Arnault is exploring ways to cut the price, LVMH says its board has met and 'notably focused' on the pandemic's possible effect on Tiffany 'with respect to the agreement that links the two groups'. Since 29 May it has been sending Tiffany letters requesting information.
LVMH, 22 avenue Montaigne, Paris: the group's address in Tiffany's proxy statementsTiffany gives notice that it is extending the long-stop date to 24 November 2020 as the agreement allows. On 17 and 18 August LVMH answers that it reserves the right to challenge the extension and says a 'material adverse effect' may have occurred.
Tiffany & Co.'s flagship, 727 Fifth Avenue at East 57th Street, New York: the shop LVMH bought, under renovation from January 2020France's foreign minister, Jean-Yves Le Drian, writes to LVMH that it 'should defer the closing of the pending Tiffany transaction until January 6, 2021', to support France's effort to dissuade the United States from putting extra customs duties on French goods. Reuters later reports that the Élysée asked for the letter; LVMH denies asking for it, and Le Drian tells parliament his ministry had received an inquiry from LVMH and answered with advice.
Quai d'Orsay, Paris: the Ministry for Europe and Foreign Affairs, whose minister wrote the letter of 31 August 2020LVMH's board says that, because of the French letter and Tiffany's request for a later deadline, the group 'will therefore not be able to complete the acquisition'. The same day Tiffany files suit in Delaware's Court of Chancery (case 2020-0768) for an order forcing LVMH to close, and asks for a trial before 24 November. LVMH says on 10 September that it will sue Tiffany.
Leonard L. Williams Justice Center, 500 North King Street, Wilmington, Delaware: home of the Court of Chancery in New Castle County, where Tiffany and LVMH sued each other in 2020LVMH asks the court to refuse a rushed trial, calls Tiffany's allegations 'meritless' and says the next results will prove a 'material adverse effect'. Tiffany's chairman had said LVMH 'has left us no choice'.
Leonard L. Williams Justice Center, 500 North King Street, Wilmington, Delaware: home of the Court of Chancery in New Castle County, where Tiffany and LVMH sued each other in 2020Vice Chancellor Joseph Slights refuses a trial before the deadline but sets a four-day trial from 5 January 2021, before Tiffany's antitrust clearances start to run out on 3 February, and says the gap leaves time for 'productive discussions'.
Leonard L. Williams Justice Center, 500 North King Street, Wilmington, Delaware: home of the Court of Chancery in New Castle County, where Tiffany and LVMH sued each other in 2020LVMH answers with a counterclaim: a 'material adverse effect' has occurred (the agreement lists exceptions for the Yellow Vest movement and the Hong Kong protests but not for a pandemic), Tiffany broke its duty to run its business normally (it paid its dividends while losing money), and the French letter blocks closing before the long-stop date.
Leonard L. Williams Justice Center, 500 North King Street, Wilmington, Delaware: home of the Court of Chancery in New Castle County, where Tiffany and LVMH sued each other in 2020After an intermediary approaches Centerview on 2 October with a price of $120, talks climb through the $120s to $130 and $131; Tiffany holds out for $132 and a deal with no escape clauses, and an offer of $131.50 emerges. On 23 October Farah and Belloni agree it, with the right to pay the next dividend, and on 24 October Tiffany's board tells its advisers to keep exploring a settlement on that basis while the case continues.
Tiffany & Co.'s flagship, 727 Fifth Avenue at East 57th Street, New York: the shop LVMH bought, under renovation from January 2020The European Commission clears the merger, the last of the antitrust clearances the agreement required.
Both boards approve an amended and restated merger agreement and a settlement, signed that evening. The price is $131.50 a share; the conditions of 'no material adverse effect' and 'no legal restraint' are gone; the long-stop date is 30 June 2021; closing cannot take place before 7 January 2021; Tiffany may pay its $0.58 dividend; a $575 million termination fee applies if Tiffany takes a better offer.
Tiffany & Co.'s flagship, 727 Fifth Avenue at East 57th Street, New York: the shop LVMH bought, under renovation from January 2020The companies announce the new price and the end of the lawsuit; the stipulation dismissing every claim is filed in Delaware the same day. CNBC (Reuters) puts the total at about $15.8 billion, $425 million less than before, and calls it 'the luxury sector's biggest-ever deal'. Arnault calls the agreement 'balanced'.
Leonard L. Williams Justice Center, 500 North King Street, Wilmington, Delaware: home of the Court of Chancery in New Castle County, where Tiffany and LVMH sued each other in 2020Tiffany announces that a crane has lifted a 66-ton crane seven stories onto the roof of the Fifth Avenue flagship, to build the glass-walled upper floors of the renovation, begun in January 2020 with the architects OMA, that is to be finished in spring 2022; the shop trades next door at 6 East 57th Street meanwhile.
Tiffany & Co.'s flagship, 727 Fifth Avenue at East 57th Street, New York: the shop LVMH bought, under renovation from January 2020At a special meeting Tiffany's shareholders adopt the amended agreement: 88,663,741 shares for and 107,715 against, with 194,545 abstaining, of 88,966,001 present, about 72.9% of the company.
- 2021
The merger closes at $131.50 a share, the first day allowed under the amended agreement and the day after the date in the French letter. Tiffany's shares are delisted from the New York Stock Exchange; the last regulator still reviewing, in Saudi Arabia, has not finished. Arnault says he is 'pleased to welcome Tiffany'.
Tiffany & Co.'s flagship, 727 Fifth Avenue at East 57th Street, New York: the shop LVMH bought, under renovation from January 2020The new owners install their team. Anthony Ledru, until then at Louis Vuitton, becomes chief executive; Michael Burke, chairman of Louis Vuitton, becomes chairman; Alexandre Arnault, Bernard Arnault's son and a former chief executive of Rimowa, becomes executive vice president for product and communications. Bogliolo, the finance chief and the brand chief leave.
Tiffany & Co.'s flagship, 727 Fifth Avenue at East 57th Street, New York: the shop LVMH bought, under renovation from January 2020Tiffany announces 'About Love', its first campaign of the new era, starring Beyoncé and Jay-Z. Beyoncé wears the 128.54-carat Tiffany Diamond, shown in an advertisement for the first time, in front of Jean-Michel Basquiat's 1982 painting 'Equals Pi', which had never been shown in public. Alexandre Arnault calls the couple 'the epitome of the modern love story'; Tiffany pledges $2 million for scholarships at historically Black colleges.
Tiffany & Co.'s flagship, 727 Fifth Avenue at East 57th Street, New York: the shop LVMH bought, under renovation from January 2020The 'About Love' film, directed by Emmanuel Adjei, in which Beyoncé sings 'Moon River' filmed by Jay-Z, goes onto tiffany.com; the print campaign had launched on 2 September. Tiffany says the diamond was found in the Kimberley Mine in 1877 and bought by Charles Lewis Tiffany a year later.
Kimberley, South Africa: the Big Hole diamond mine, where the rough stone of the Tiffany Diamond was found in 1877
