Analyzing the Financial Implications of LVMH's Tiffany Acquisition

This case study examines the merger and acquisition between LVMH and Tiffany & Co, detailing the contract specifics, dollar values, and the responses from industry stakeholders and shareholders. It explores the discounted cash flow analysis and considers the takeover's influence on competitors within the luxury goods market, particularly highlighting LVMH's strengthened position against rivals like Compagnie Financière Richemont SA. The analysis concludes that strategic mergers and acquisitions can significantly enhance a firm's long-term market value, emphasizing the importance of accurate statistical computation in evaluating such deals for sustained efficiency and effectiveness.

MERGERS AND
ACQUISITIONS

Table of Content
◦Introduction
◦Explanation of Contract
◦Dollar value
◦ The responses of the industry and shareholders
◦Discounted cash flow
◦Topics for consideration
◦Conclusion
◦References

Introduction
This presentation is based on the merger
and acquisition that is done between the
two companies that are LVMH and Tiffany
and thus all the related aspects are
calculated with utmost precision in this
presentation so that it can give a thorough
image of the company as a whole.

Explanation of Contract
◦Names of the participants, their businesses, and their industries: LVMH Mot Hennessy
Louis Vuitton SE, the worldwide highest premium company, and Tiffany & Co, the
globe's largest premium jeweller, are the 2 groups (Amnuai, 2019).
◦Beverages and Drinks, Apparel and Footwear Products, Health and Beauty products,
Timepieces and Ornaments, Selected Retailing, and certain other operations are the
6 areas in which LVMH operates. The business operates globally and is the global
superpower in luxurious products (2019 revenue of €53,67 billion).

Dollar value
◦1 USD = 0.9009 EUR on 25/10/19
◦1 USD = 0.9075 EUR on 25/11/19
◦1 USD = 0.8842 EUR on 12/11/19

The responses of the industry and shareholders
◦Shareholders response- LVMH stakeholders have significant trust in the company's
order to sustain Tiffany's long heritage of quality retailing and marketing. LVMH
investors will not see any shares reduction as a result of the transaction because no
shares will be offered.
◦The response of the industry- Although the premium cost was quite expensive,
LVMH's shares surged upward soon when the agreement was revealed, indicating that
the marketplace welcomed the takeover. Since this transaction is in line with LVMH's
plan, the marketplace has responded in this manner.

Discounted cash flow-
Net change in
cash during
period 78.9 68.9 79.4 91.5 105.4
Discounted
present value
@7% 0.9346 0.8734 0.8163 0.7629 0.713
discounted cash
flow 73.73994 60.17726 64.81422 69.80535 75.1502 343.687

Topics for consideration
The takeover's influence on the company's rivals- The LVMH-Tiffany acquisition
would increase commercial rivalry in the metal industry, forcing other prominent
premium and jewels businesses to consider M&A as a strategy to combat pressures
from emerging competitors in the retailing advertising sector. With the Tiffany
transaction, LVMH has surpassed competitors and challenges the supremacy of
Switzerland's Compagnie Financière Richemont SA, which owns Cartier, Piaget, and
Van Cleef & Arpels, among others..

Conclusion
It can be concluded that merger and acquisition is one of the most important aspect and
thus if used in an impactful manner it can add to the value of the firm in the long term
market. This presentation is based on the merger and acquisition of the firm that is
LVMH and Tiffany and all the necessary statistics are calculated and computed in this
presentation with accuracy and precision so that it can prove effective and efficient for
the firm in the long run scenario.

References
◦ Amnuai, W., 2019. Analyses of rhetorical moves and linguistic realizations in accounting
research article abstracts published in international and Thai-based journals. Sage Open, 9(1),
p.2158244018822384.
◦ Bassani, G. and Cattaneo, C., 2019. Enterprise Risk Management e Managemen Accounting
Systems in una Banca di Credito Cooperativo. Enterprise Risk Management e Managemen
Accounting Systems in una Banca di Credito Cooperativo, pp.13-33.
◦ Hsu, P.H. and Lin, Y.R., 2016. Fair value accounting and Earnings Management. Eurasian
Journal of Business and Management, 4(2), pp.41-54.

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