Tiffany & Co.: The LVMH Proposal

This case set considers the acquisition of American jewelry icon Tiffany &amp; Co. (Tiffany) by French luxury goods manufacturer LVMH Moët Hennessy Louis Vuitton (LVMH). While this case can effectively be taught in isolation in a traditional case format, it is designed to be taught in tandem with the B case, “LVMH: The Tiffany Acquisition” (UVA-F-2013) in a merger negotiation format where students work in small groups, taking the perspective of either the acquirer or the target to negotiate the terms of a merger. Set in 2019, the cases invite students to consider the strong revenue-generating and operational-efficiency gains that LVMH and Tiffany share by combining the two businesses. Each of the cases provides a different perspective on the deal, including variation in the pro forma financial forecasts. Through the experience, students are challenged to realize the merger gains by completing a deal in an environment of uncertainty in valuation methodology and ambiguity in negotiation strategy. The negotiation is supported by a multimedia application that facilitates student distribution of the case materials, collection of the negotiation results, and the creation of custom slides for the student debrief. The merger negotiation format is most effectively taught over two class sessions. The cases are designed to be discussed late in an introductory MBA finance course or an advanced undergraduate corporate finance class. Especially when used in the negotiation format, the cases serve as an effective capstone experience in a corporate finance curriculum.<p>Excerpt</p><p>UVA-F-2012</p><p>Apr. 22, 2022</p><p>Tiffany &amp; Co.: The LVMH Proposal</p><p>I don't like the word “luxury”…I like to define Tiffany as a legendary brand because it's a brand that really has become a legend.</p><p>—Alessandro Bogliolo, CEO Tiffany &amp; Co.</p><p>It was a chilly October morning in 2019. Mark Romano took a few extra moments to admire the gorgeous red, orange, and yellow foliage on the trees in New York City's Madison Square Park before hurrying down the avenue toward his office at the corporate headquarters of Tiffany &amp; Co. (Tiffany). Romano, one of Tiffany's top executives, had been working nonstop all week with his team to prepare for a meeting in which luxury conglomerate LVMH Moët Hennessy Louis Vuitton (LVMH) was expected to make an unsolicited offer to acquire Tiffany. After countless hours of preparation, Tiffany's CEO Alessandro Bogliolo was scheduled to meet the next day with an executive from LVMH, and their conversation could have historic implications. If the two companies could come to an agreement, the resulting merger would be one of the largest M&amp;A transactions ever recorded in the luxury goods industry.</p><p>. . .</p>