Before news leaked twelve months ago that Arnault was interested in buying Tiffany, the jewelry company’s board was focused on independently turning around the business for a few years under CEO Alessandro Bogliolo, who shares a professional history with Arnault, having worked at Bulgari and perfume specialist Sephora, according to people familiar with the board’s thinking. The way management saw it was that it was Arnault pushing for the transaction, not the other way round, said the people, asking not to be identified discussing private matters.
LVMH and Tiffany declined to comment for this story.
The renegotiated price now lets both sides claim victory. Arnault gets to own the prized jeweler, while Tiffany will be able to tap into a LVMH’s resources, from brand network to the global marketing machine.
“Finalizing the deal is a clear positive for Tiffany’s share price, which has been subject to significant volatility in the past few months,” UBS analysts wrote in a note on Thursday.
Still, Tiffany’s top brass should brace for changes once the deal closes in January. Integrating Tiffany into the LVMH universe will probably lead to a product overhaul, a more aggressive digital marketing strategy and a review of the existing shop network, said Jefferies’ Cereda.
Next Generation
Other changes may include management. Arnault is known for putting his own loyalists in charge at new companies to gain tighter control. Among people at Tiffany who might move on is Roger Farah, the charismatic chairman who had publicly criticized Arnault’s tactics in recent months, people close to the companies say.
While the deal has cemented Arnault’s reputation as a consummate and hard-nosed dealmaker, he’s likely at a point in his career and personal life where he has little left to prove. At 71, he’s a revered patron of the arts in France, a philanthropist who enjoys the ear of the upper echelons of the political establishment. Most of his children are already ensconced at the company, and there are very few remaining assets that he can buy at this point to truly take LVMH to another level.
“Business is business in the end,” said Paola Carboni, an analyst at Equita. “Both partners have tried to make the most of the deal and were both very aggressive. Was it worthwhile to have such a battle for many months? I don’t know.”
This article was provided by Bloomberg News.