What Tiffany’s acquisition means for the jewelry industry

Lenore Fedow

Life as the resident retail reporter at National Jeweler can be a bit of a bummer.

It’s an unofficial and self-bestowed title, but if stores are closing or companies are going bankrupt, I tend to cover it.

Truly, I like my beat. I do my best work when I’m elbow-deep in quarterly reports and court documents.

But when the rumors of LVMH’s acquisition of Tiffany & Co. began to fly, I felt a bit uneasy.

As a lifelong New Yorker, I have a soft spot for Tiffany. My everyday jewelry, the pieces I consider a part of me, all came in a little blue box.

I see the company as an American icon and quintessentially New York, and I wasn’t sure how to feel about a French luxury conglomerate buying it.

As a reporter covering retail, I mulled over what the deal would mean for Tiffany and, more broadly, for the jewelry industry at large.

So I picked the brains of experts and analysts, and I’ve come to you with my findings.

Here’s what makes Tiffany so valuable and why those factors matter to the overall industry.

Tiffany brings a strong brand to the table.

Amid reports of a potential acquisition, Tiffany confirmed in October it had received an unsolicited bid from LVMH for $120 per share, valuing the company at $14.5 billion.

After talks with LVMH, Tiffany reportedly asked the company to up the bid to $130, believing the company was worth more.

And Tiffany was right. The final deal was for $135 per share, or $16.2 billion, one of the largest transactions in LVMH’s history.

Tiffany was able to command big bucks, in part, because of the strength of its brand.

Flavio Cereda, an equity analyst at Jeffries, stated in a note written prior to the deal that Tiffany’s “brand equity and the strength of the image of its iconic 1837 Blue Box are more valuable than the current financials suggest.

LVMH, with all its brands, does not have a strong, solid diamond jewelry brand like Tiffany or that caters to Tiffany’s clientele,” industry analyst Edahn Golan wrote in an email to National Jeweler.

LVMH’s watch and jewelry portfolio consists of Chaumet, Bulgari, Fred, Hublot, TAG Heuer, and Zenith.

Of the six companies in LVMH’s watch & jewelry group, only Chaumet is a diamond jewelry company, which means that the group has a lot of room to grow,” he said.

From its trademark Tiffany Blue color to the white ribbon around its boxes, Tiffany’s strong brand presence is a valuable asset.

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Source National Jeweler