The LVMH

Acquisition of
Tiffany & Co.

Pedro de Almeida, Max Balthasar, Moritz Eckenberger, Niclas Gerber, Diogo Mendes Godinho Moura de
Mesquita
 Table of Contents

01 02 03
Luxury Goods
LVMH Tiffany & Co.
Industry

04 05 06
Analysis of the Post-Acquisition
Purpose of the Analysis
Deal Deal

x 2
01
The Luxury
Goods Industry
The top 1 0 companies in the luxury goods industry accounted for 81 % of the year-on-year sales
growth and 8 5% of the combined net profit of the Top 1 0 0 luxury goods companies
Luxury Goods Industry
(1/2)
Quick Facts Share of Luxury Good Market by Region
4% 4
%
$300-350 Billion 15% 11% 14%
Rest of World 4% 7% 7%
Aggregate luxury goods sales 8%
Rest of Asia 11% 21% 17%

Japan
32% 27%
5.4% CAGR (2022-2030) China
26%

Apparel industry growing at higher CAGR of 6.7%

Europe
30% 31% 32%
Americas
$3 Billion
2019 2021 2022
Average size of Top 100 luxury good company
Top 1 0 Share of Top 1 0 0 Luxury Goods Sales

4 Main Sub-Markets
Watches & Jewelry, Perfumes and Cosmetics, LVMH is the clear luxury goods leader,
Apparel, and Bags/Purses 43.8
contributing
% 56.2

3 2%
%

3 Largest Companies
LVMH (France), Kering (France), Estée Lauder (USA) of the Top 10 Sales
Top 10 Other
90
x 4
Sources: Deloitte, Globe Newswire
The Luxury Goods Industry experienced high M&A activity over recent years with 2 7 7 deals
struck in the global fashion and luxury goods industry in 2 0 2 0
Luxury Goods Industry
(2/2)
Luxury Watches & Jewelry in $B M&A Deals ( 202 0- 20 21)
$85
$90.0 Moncler Acquisition of Stone Island ($1.4B/100%)
$80. $75
0 $67 $68 › Purpose: expand reach among younger and fashion-conscious
$64
$70. $55 consumers, tapping into growing demand for streetwear and urban
0 fashion
$60.
0 › Synergies: SC optimization, distribution channels, and marketing
$50.
0
$40.
0 VF Corp. Acquisition of Supreme ($2.1B/100%)
$30.
0 2019 2020 2021 2022 2023 2028 › Purpose: accelerate VF’s consumer-minded, retail-centric, hyper-digital
$20. Luxury Jewelry Luxury Watches business model transformation
0
› Synergies: collaborations with existing portfolio companies (Vans, North
$10.
Market
0 Drivers Face); extensive global distribution network, operational expertise, and
$0.
financial resources to support Supreme's growth
0
Experiential Luxury and Changing Consumer
Personalization Demographics LVMH Acquisition of Off-White™️($Unknown/60%)
› Purpose: Capitalize off the intellectual property and future Off-White
Digital Transformation Increasing Status-seeking projects → transition from “luxury” to “progressive luxury”
and E- Culture › Synergies: few synergies as Off-White is horizontally integrated, therefore,
commerce does not provide synergies for LVMH in terms of vertical integration

Emerging
Markets
x 5
Sources: Statista, LVMH, Moncler, VF Corporation
02
LVMH
LVMH – Unleashing the Global Potential of Luxury: A Conglomerate of Iconic Brands
LVMH (1/2)
Overview Quick Facts
› French multinational conglomerate in the luxury goods
industry and global leader 75 Brands or ‘Maisons’
(houses)
› Formed in 1987 through the merger of Louis Vuitton
(1858) and Moët Hennessy (1971) 196,000 Employees operating in 81 Countries
› Divisions: Wines & Spirits, Fashion & Leather Goods,
Perfumes & Cosmetics, Watches & Jewelry, and Fashion & Leather Goods (49%), Selective Retailing
Selective Retailing (19%)
› First European company to surpass market cap of $500B Main Competitors:

Revenue by Region Group Financials in €M ( 20 1 8 – 2022)

USA Franc Asia
100,000 80
€21. e €23.8 %
B €6.0B B 80,000
75
60,000 %
70
40,00
%
0
65
20,00 %
0
201 201 202 202 202 60
0 8 9 0 1 2 %
Other Markets Europe Japa Sale EBITD Net Income Gross Margin 55
€9.6 €12.7B n s A %
B €5.4B x 7
50
Sources: LVMH, FT
%
LVMH’s vocation is to ensure the development of each of its Maisons
LVMH (2/2)
Balance across
Operating Model Organic Creating Business Segments
Synergies and Geographies
Growth

Decentralized Vertical Sustaining

Organization I ntegration Savoir-Faire

M&A Activity

1990 1995 2000 2005 2010 2015 2020

x 8
Sources: Firstclasse
03
Tiffany & Co.
Tiffany – A stable leader in the watches & jewelry sub-
market(1/2)
Tiffany
Overview The Brand
› American manufacturer and seller of luxurious watches &
jewelry with 185 years of history The King of Diamonds since the 19th century
› Started as a stationery and fancy goods store under the
Downfall under the leadership of Avon Products
leadership of Charles L. Tiffany and John B. Young
› IPO on the NYSE in 1987
Brand valued at $6.5Bn by Interbrands:
› Global presence through 326 stores and online shopping
 The 88th most valuable brand in the world
› Almost inexistent M&A activity – organic growth shaped
 The 7th most valuable brand in the luxury market
the path to the top of the market

Group Financials in $ M Key Financial Metrics

5,000 65.0 › Stability of revenues: 1.51% CAGR (2016-2020)
%
4,00
0 60.0
%
› United States as the main source of
3,00 revenues
0 55.0
% › Poor growth translated by a -0.73% CAGR (2016-2020)
2,00
0 50.0 of Net Income
%
1,00 201 2017 2019 202
0 6 2018 0 45.0 › Gross margin according to the market
Net income %
Gross margin
0 Sales Operating profit
average
40.0
x 10
%
Sources: Factset, Statista, Tiffany & Co., Interbrands, Sothebys
Tiffany – A stable leader in the watches & jewelry sub-
market(2/2)
Tiffany
Financial Ratios Comments

20.0% 6.00 9% RoA vs. 4.3% from the top 10 players of

x the
4.00 market (2020)
10.0 x
%
High current ratio (3.99) highlights room for
2.00
x higher efficiency
0.0 0.00
% 2016 2018 202 x 17% return on equity – value creation for
2017 2019 0 shareholders
Current ratio
Return on Assets Return on equity

Stock Performance Main shareholders prior to the

160 deal
140
The Vanguard group: 11%
120
100
80 Qatar Investment Authority: 9.75%
60
40
20
BlackRock: 6.47%
0
2016 2017 2018 2019 2020

x 11
Sources: Factset, Deloitte, Tiffany & Co, S.E.C.
04
The Purpose of
the Deal
The main motivation behind LVMH acquiring Tiffany & Co. is driven by growing LVMH’s business,
more explicitly, its Watches & Jewelry division, as well as its global presence.
Motivation of LVMH to acquire Tiffany & Co.
Revenue by Division in % ( 2 0 13 – 2 0 18 ) Reasons to Integrate Tiffany & Co.

1.0 1.0 1.2 1.7 1.5 1.5

100

90
11.1 11.0 10. 10.9 10.6 10.7 Strengthen the Watches & Jewelry Division
8
80 14.3 12.9 12. 12.8 11.8 10.9 › Strongest growing sector in the luxury sector (+7%) in
70
8
8.7 8.6 2018
9.4 8.9 9.1
› Less than 10% of LVMH total sales
60
9.1
50 31.1 29.0
30.6 31.0 31.4 31.8
40 Expand Global Presence
30
› Tiffany & Co. is the “leading luxury brand originated in
20
39.3
the United States”
33.7 35.2 34.6 33.9 36.2
10 › Growing share of revenues obtained in Asia
0
DEC '13 DEC '14 DEC DEC '16 DEC '17 DEC
'15 '18 Make use of Efficiency Synergies
Fashion & Leather Goods Selective Retailing › Efficiency synergies will lead to an increase in sales
Watches & Jewelry
Wines & Spirits and reduce the overall costs
Perfumes & Cosmetics
Other & Holding
› Synergies will unlock potential to develop Tiffany & Co.
Companies
x 13
Sources: LVMH, Bain & Company
After years of stagnating sales, joining the LVMH conglomerate enables Tiffany & Co. to develop
and grow their business benefitting from increased funds and synergies.
Motivation of Tiffany & Co. to be part of LVMH
LVMH is the Leading Player in the Luxury Sector LVMH is Known for Growing Brands

Revenues nearly doubled between 2012 and 2016 from

Acquisition: 2012
c. €105m to c. €195m

Revenues increased from c. €44b to nearly €65b

Acquisition: 2017
between 2017 and 2021

Between 2019 and 2021, LVMH expanded the

Acquisition: 2001
FENDI brand, whose brand value was tripled

Increase Target Launch of Revitalization of

Marketing Budget Millennials New Products Retail Stores

x 14
Sources: LVMH, Forbes, Statista
Synergies between LVMH and Tiffany & Co. mainly lead to increased revenues and reduced
costs. Especially the acquired company is benefitting from efficiency synergies.
Analysis of
Synergies
Opportunity Areas
› Increase of prices: LVMH usually increases the prices
Revenue of their new implementations (e.g., RIMOWA)
Growth › Increase of units: Launch of new products, increased
marketing, cross-selling activities

› LVMH: Diversification of brand portfolio

Risk and strengthening of the largest growing
Reduction luxury sector
› Tiffany & Co.: Will be able to rely on more resources of
every nature

› Tiffany & Co.: Reduction of working capital through

Merger Reduction of efficiency gains
Synergies › As part of LVMH, Tiffany will have more negotiation
Investments power with suppliers and consumers

› Reduction of SG&A expenses through personnel

Reduction of cutting and usage of LVMH commercial expenses
› Reduction of production costs through usage of
Costs Tiffany & Co. manufacturing facilities
› Potential tax benefits and lower financial costs

x 15
Sources: LVMH, Forbes
05
Analysis of the
Deal
LVMH initially approached Tiffany & Co. in order to pursue an acquisition. The negotiation got
affected by the COVID-19 pandemic before an agreement was reached in October 20 2 0 .
Negotiation Process

Timeline of the Negotiation

Tiffany’s 2020 Q1 Tiffany filed a

Companies approve report with -44% lawsuit against Final agreement for
the 135$/share bid sales LVMH $131.5 per share

28 t h Oct March 31 s t Aug 26 t h Oct 7 t h Jan

2019 2020 2020 2020 2021

24 t h Nov 9 t h Jun 9 t h Sep 28 t h Oct

2019 2020 2020 2020

1st bid of Coronavirus Political All regulatory Closing

$120/ outbreak in Europe intervention of approvals
share, and US French government completed
unsolicited

x 17
Sources: Factset
The final agreement was achieved at $13 1.5, a 7.3% premium compared to the stock market at
the time and a 17.9x EV/EBITDA multiple. The payment structure was all cash.
Key Financial Aspects

Final Valuation Payment Tiffany Luxury Industry

Valuation Premium Structure Transactions Transactions
Final 7.3% premium 100% of the payment EV/EBITDA EQ/EBITDA
agreement: compared to structure was in LVMH (21): 17.9x LVMH:
$131.5 per the stock cash
Qatar Holding 21.5x
share market1
(12): 10.2x Industry Avg.:
33.9x

1 Closing price the day before the announcement

x 18
Sources: Factset & Pitchbook
06
Post-Acquisition
Analysis
The acquisition of Tiffany & Co. by LVMH has proven to be a critical strategic move, significantly
bolstering the company's market position and expanding its luxury brand portfolio.
Overview of Post-Acquisition Results

Increased Market Share Leveraged Synergies

In the global high-end jewelry Such as operational, marketing,
segment from 10% in 2019 to 24% in financial and branding
2022

Reinforced US Foothold Access to Retail Locations

W&J1 market share rose from Such as the iconic Tiffany’s flagship
5% in store on Fifth Avenue in New York
2019 to 35% in 2022 &

Enhanced Brand Image Strong Financial Performance

New marketing strategies to resonate Referred to “highlight of the year” by
younger customer base for future growth CEO Bernard Arnault

1 Watches & Jewelry

x 20
Sources: LVMH Annual Report 2019 & 2022, Statista
The acquisition has delivered highly positive financial results, with the American luxury jeweler
retailer becoming a major contributor to LVMH's revenue and growth.
Post-Acquisition Financial Assessment
Tiffany & Co Revenue 2 0 1 7 to 2 0 2 2 LVMH Watches & Jewelry Revenue 2 0 1 7 to 2 0 2 2
7.3
1
0
9. .
6. 0 6
2
5. 5.
5 6 4.
5. 3. 4.
1 4 3.4 7.3
1 8 6.2
4.
4 2.8 3.3

2017 201 202 202 202 2017 2018 2019 2020 2021
2018 9 0 1 2 In USD Billion excluding Tiffanys 2022
In USD Billion In USD Billion Tiffanys contribution
Comments Comments
› Tiffany was a primary contributor to LVMH growth › Significant growth of LVMH’s Watches & Jewelry segment due to
› Became LVMH’s second largest brand with $6.2b Sales in acquisition (+265% in 2021)
2021 › Watches & Jewelry accounted for 8.2% of LVMH revenue mix in
› In 2022 Tiffany managed to grow sales by additional +18% 2019 and 13.4% in 2022
› The acquisition has reinforced the groups financial stability › The acquisition further diversified of LVMH revenue streams

x 21
Sources:: LVHM Annual Report 2019 & 2022,
By combining shared values with new strategic initiatives, the merged entity has been able to
enhance the brand value, gain market approval, and record impressive financial performance.
Corporate Culture Integration & Customer Sentiment
Similarities Summary
› Existing corporate cultures grounded in tradition, quality and excellence
› Shared focus on luxury and quality
› Ensured the continuity in the brands identity and reputation Aligned Corporate Cultures

Implemented Change
› Reinvention of marketing strategy marked shift from traditional approach Gained Market Approval
› “About Love” campaign achieved global success, especially among young
people
› Exemplified evolving corporate culture and
underlined marketing synergies Enhanced Brand Recognition

Market Reaction
› Merger garnered positive responses from both the market and consumers
› Tiffany outperformed previous records in terms of revenue and profitability Outperformed Commercial Records
› Demonstrates effective corporate culture integration, successful strategy
implementation, and market approval

x 22
The overall strategic goals, which encompassed financial objectives, market share expansion,
and brand enhancement, have been significantly achieved.
Success or Failure of the
Deal?

Financial Strategic Other

› Record breaking financial growth › Global Watches & Jewelry market › Enhanced innovation,
› Generate a cash flow of $13.5 share from 10% to 24% marketing, production and branding
billion and almost paid for the › US Watches & Jewelry market share synergies cultures were perfectly
› Corporate
acquisition within 1 year from 5% to 35% aligned
› Analysts reacted overly positive to › Repositioning of › Extremely positive reception
the post-acquisition results campaign gained huge popularity,
marketing with
especially among demand at an all time
younger demographics

x 23
Thank you for
your attention!

Pedro de Almeida, Max Balthasar, Moritz Eckenberger, Niclas Gerber, Diogo Mendes Godinho Moura de
Mesquita