Bulgari Joins LVMH in $5 Billion Deal

Posted on March 7, 2011

LVMH (Moet Hennessy Louis Vuitton) is acquiring Bulgari, an Italian luxury jewelry and fashion company. The deal will make LVMH an even larger amalgamation of major fashion and jewelry brands. The deal was concluded this weekend and was approved unanimously by the LVMH Board of Directors Sunday evening. Reuters reports that the entire deal is worth over $5 billion.

Upon completion of the share transfer process, LVMH will issue 16.5 million shares in exchange for the 152.5 million Bulgari shares currently held by the Bulgari family. The Bulgari family will then become the second largest family shareholder of the LVMH Group. LVMH announced a tender offer of 12.25 Euros a share to acquire the remaining shares of Bulgari. Dealbook says this is a 61% premium over the pre-announcement share price.

Paolo and Nicola Bulgari will remain Chairman and Vice Chairman of the Bulgari S.p.A. Board of Directors, respectively. The Bulgari Family will get to appoint two representatives to the LVMH Board of Directors,Francesco Trapani, CEO of Bulgari S.p.A., will join the Executive Committee of LVMH. He will assume ithe management of the LVMH enlarged Watches and Jewelry activities later this year. Philippe Pascal, the current Head of these activities, will remain on the LVMH Executive Committee and will be given new responsibilities within the Group.

Francesco Trapani, Chief Executive Officer of Bulgari S.p.A., says in a statement, "Our entrance into LVMH will allow Bulgari to reinforce its worldwide growth and to realise noteworthy synergies, in particular in the areas of purchasing and distribution. I would like to add that I am greatly honoured that the management of LVMH's Watches and Jewelry activities, which include prestigious brands such as TAG Heuer, Chaumet, Zenith, Hublot, Fred and De Beers, has been entrusted to me. Bulgari and these brands will be able to invest and innovate even further to become the world leader in the high end segment."

Marketwatch reports that shares of other luxury companies, including Tiffany & Co., climbed in earlier trading on the news of the LVMH and Bulgari deal.

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