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LVMH acquires Botswana‘s diamonds buyer

Publishing Date : 03 December, 2019

Author : ALFRED MASOKOLA

LVMH Moët Hennessy – Louis Vuitton SE, the world‘s largest luxury goods giant has reached an agreement with the board of Tiffany & Co, in a move that will see the company purchase the world most iconic jeweler.


This week Global business corridors were awash with the historic acquisition which will see the French multinational luxury goods conglomerate cement its position as a universal elite’s goods powerhouse. The Paris headquartered empire run by Billionaire Bernard Arnault will bring the iconic American jewelry brand into its fold at a cost of over $16 billion, making it the biggest luxury brand acquisition ever and adding to the firm’s portfolio, which includes Louis Vuitton and Sephora.


The watershed deal was confirmed by LVMH on Monday. According to Forbes LVMH will acquire Tiffany for $135 per share in cash, for a total of $16.2 billion ,almost $2 billion higher than the initial bid that LVMH made for the luxury jeweler in October. Tiffany will sit among LVMH’s 79 brands, in its watches and jewelry division. Global analysts say the deal will strengthen LVMH’s position in North America and build on its foundation in the jewelry market. The deal is expected to go through in the middle of 2020, LVMH said.


 Shares of the Paris-based fashion house were up 2% on Monday morning, while Tiffany shares were up 6% in premarket trading. LVMH Chief Executive Officer & Chairman Bernard Arnault told global media houses that his company was excited to bring Tiffany into its fold. “We have an immense respect and admiration for Tiffany and intend to develop this jewel with the same dedication and commitment that we have applied to each and every one of our Maisons.”


New York Times says 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 deal maker in the luxury business.


TIFFANY & BOTSWANA

LVMH’s acquisition of Tiffany & Co makes the Benard Anault run conglomerate one of the most important businesses in Botswana major economic sectors. Tiffany & Co is one of the major buyers of Botswana’s polished diamonds. In 2011 Tiffany opened a full diamond polishing and sorting factory in Botswana, valued at $4.8 million. In January this year the 182 year old American Jeweller in a bid to increase its transparency and raise ethical jewelry standards across the industry announced that it would expand its diamond polishing operations in Africa, particularly Botswana.


Botswana, the world's largest diamond producer after Russia, is the only African country where Tiffany & Co both buys and manufactures its stones. About 80% to 90% of Tiffany's polished diamonds are acquired and manufactured through its Antwerp-based subsidiary, Laurelton Diamonds, which sources stones mined by De Beers from their operations in Botswana, Canada, Namibia, South Africa as well as Russian giant Alrosa , amongst others. Laurelton has manufacturing operations in Belgium, Botswana, Mauritius, Vietnam and Cambodi.


 MASISI’S VISIT TO TIFFANY

Early this year President Masisi visited Tiffany & Co headquarters in New York and held talks with the company executives. He noted that Tiffany will continue being Botswana‘s major trading partner in the diamond business. Masisi’s visit to Tiffany was just a few months after Tiffany & Co Chief Executive Officer, Alessandro Bogliolo visited Botswana.


While in Botswana Bogliolo paid a courtesy call on President Masisi where he highlighted that his company is what it is because of quality and ethically sourced diamonds mined in Botswana. Tiffany & Co started buying Botswana diamonds 50 years ago and had been operating polished factories in Botswana for the past 12 years employing about 200 people majority of which are citizens.


TIFFANY TAKEOVER MAKES BERNARD ARNAULT SECOND RICHEST PERSON ON EARTH

According Forbes, Bernard Arnault, Chairman and CEO of LVMH (LVMHF), is now worth nearly $108 billion.Arnault's net worth jumped more than 1% Monday and nearly another 3% Tuesday along with LVMH's stock following his company's agreement to buy Tiffany (TIF) for more than $16 billion.


Arnault and his family own more than 47% of the French luxury goods giant. The spike in LVMH shares puts Arnault just ahead of Microsoft (MSFT) co-founder Gates, who has a net worth of $107 billion, and trailing only Amazon (AMZN) CEO Bezos, who tops the Forbes list with a fortune of just over $110 billion.


LVMH’S TOURISM INTERESTS IN BOTSWANA


Having clinched on a lucrative value chain stake in Botswana’s diamond industry LVMH Moët Hennessy – Louis Vuitton SE now has billion dollar interests in Botswana’s two major economic sectors. Early this year Botswana’s Competition Authority approved an acquisition by the French conglomerate.


The billion dollar global powerhouse acquired Belmond Botswana, a company that operates Eagle Island Lodge which is situated in the Okavango Delta in Xaxaba Island. The lodge is Botswana’s host of the world leading personalities, musicians, billionaires, royals and business people who visit the tourists’ attraction country.


Early this year LVMH completed acquisition of Belmond Group for $25.00 per Class A share in cash mirroring equity value of $2.6 billion in transaction and $3.2 billion in enterprise value. This transaction directly gave LVMH full ownership of three safari lodges in Botswana being Belmond Kwai River Lodge, Belmond Savute Elephant Lodge and the Belmond Eagle Island Lodge.

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