Luxury giant LVMH to buy Tiffany & Co.

LVMH Moët Hennessy Louis Vuitton, the world’s largest luxury goods company, said Monday it had reached an agreement to buy the jeweler Tiffany & Co. in a $16.2 billion deal, the largest ever in the luxury sector.

The acquisition will give LVMH a bigger foothold in the United States, as well as help Tiffany in Europe and China. It will also cement the status of Bernard Arnault, the LVMH chairman and chief executive, as the most acquisitive dealmaker in the luxury business.

“Tiffany is an American icon and was on the list of brands for a long time we thought was a good potential match,” Arnault said from Paris.

The acquisition would add another prominent U.S. name to the LVMH stable of brands, which includes Dior, Givenchy, Fendi and Dom Pérignon. The deal would help propel the French luxury company into a leadership position not only in traditional soft luxury goods like clothing and handbags, but also what is known as the hard luxury sector, which includes watches and jewelry.

Some analysts expect the announcement to trigger other deals as brands fight to compete in a world of behemoths like LVMH and Richemont.

The agreement with Tiffany, known for its signature blue boxes and a prominent role in the Audrey Hepburn film “Breakfast at Tiffany’s,” is the second major investment in a U.S. brand for LVMH this year since it created a new luxury house, Fenty, with musician and actor Rihanna.

The deal will leverage LVMH’s presence and expertise in China to help Tiffany expand in the region, where the companies will look to bring more of their goods to mainland consumers in an effort to tap into their spending power. Chinese tourist spending has been hit hard by the depreciation of the yuan, the trade war between the United States and China and protests in Hong Kong.

Arnault said he also believed the brand had real potential to expand its reach in Europe.

Tiffany is “strong in the U.S. and Japan, but weak in Europe and not up to growth in China,”

Arnault said. “There we can help a lot, find the best locations.”

The deal, which still requires the approval of Tiffany’s shareholders, is expected to close in the middle of next year.

Jason Alden / Bloomberg A shopper holds a paper Tiffany & Co. bag Monday outside a store in London. LVMH agreed to pay $16.2 billion for the U.S. jeweler, the largest deal ever in the luxury sector.