Tiffany Shareholders Show Their Love, Approve LVMH Deal

Luxury titan Bernard Arnault cares about Tiffany & Co. — to the tune of $16.2 billion — but he’s not the only one.

When the luxury jeweler’s shareholders gathered at its New York headquarters Tuesday morning to vote on the mega sale to Arnault’s LVMH Moët Hennessy Louis Vuitton, it was in all the important ways, already a done deal. (Arnault wasn’t on the scene, but later issued a statement praising the go-ahead of the transaction, the largest deal ever in the luxury space).

The meeting was a formality and little resistance was expected to the deal, struck in November at $135 a share. Investors holding about 72 percent of Tiffany’s stock were represented at the meeting, although the majority of those shares appeared to be voted by proxy.

In the room — sipping free coffee, nibbling on croissants, chatting with chief executive officer Alessandro Bogliolo and reading over the rules of the meeting (printed on Tiffany blue paper) — was an eclectic group of smaller shareholders and employees.

They were split on the deal. And while those against it were hopelessly outnumbered, they pressed their cases, sometimes in emotional terms, addressing Bogliolo, who chaired the meeting, and Leigh Harlan, senior vice president secretary and general counsel.

“I’m really upset about this,” said one woman, who said she had been a shareholder since the Eighties. “Tiffany is one of the last iconic American companies. With all due respect, I think it’s important who owns a company.

“The founders of this company were so American, I’m just shocked by this, so obviously I’m voting against it,” she said, referring to Charles Lewis Tiffany, who started the company in 1837. “I just wanted it known in the history books that someone…I think many are not happy with this.

“When I got my ring in 1982, I first went to another store and they said, ‘You better go down the street to Tiffany’s,’ and when I got there, it was such and it still is — I don’t know if it will remain that way — the most democratic store that I’ve ever been to that sells beautiful things. Democratic with a small ‘d,’” she said.

That notion — that Tiffany is a democratic brand — came up a couple of times and Bogliolo stressed that LVMH has many businesses in its portfolio — yes, Louis Vuitton, but also Sephora, which has accessible prices — and is a brand he once worked at, as chief operating officer of North America.

On the flip side, another shareholder said she flew from Georgia to be at the meeting, leaving behind the room in her home that she has dedicated to “Breakfast at Tiffany’s.”

She praised the negotiations, which started with an unsolicited offer of $120, a price that Tiffany chairman Roger Farah ultimately negotiated up by $15.

“I’ve owned Tiffany since 2008,” the shareholder said. “During the financial crisis I was willing to step in and buy the shares as everyone was dumping them. It literally changed my life. I’m a small investor and Tiffany allowed me to buy jewelry I never thought I would have.

“I notice the watch you have on, I believe that’s the limited edition,” she said to Bogliolo, who answered in the affirmative. “It allowed me to buy that watch, thank you very much.”

A shareholders’ meeting like this is the corporate equivalent of local politics, where every issue is on the table and every one is personal. Several pensioners asked about who would be managing their retirement savings and how they could get in touch with them, when or if the next dividend would come and so on.

The collection of big books with several hundred pages of details on the deal did not need to be consulted.

Some of the questions, though, did highlight the fact that much remains unresolved. The deal is still subject to routine regulatory approvals and the details of the merger are yet to be worked out. Tiffany will become a wholly owned subsidiary of LVMH, but even the executive leadership doesn’t know exactly what’s coming.

One employee wanted to know what LVMH’s plans were before voting, but no answer presented itself.

A separate shareholder asked somewhat another way: “What becomes of the current officers of Tiffany?” and garnered some slightly nervous laughter from the assembled executives.

“That is one we will leave to LVMH,” Harlan said. “None of the officers have engaged with any discussions with LVMH about their future employment or the terms thereof. So that is something we can anticipate will be coming up in the near term.”

Aside from the people, there was a lot of interest in what would become of the famed Fifth Avenue flagship, which is closed for renovation and relocated to a former Nike store nearby. The questioning was at times meandering, although it sometimes revealed interesting nuggets. Tiffany, for instance, subleases the space of its temporary store from Nike, but the building is owned by the Trump Organization.

One shareholder noted that once the deal is closed, LVMH, which has stores for other brands nearby, could do what it wants with the Tiffany building.

But the sense in the room seemed to be that, while LVMH does own a lot of brands and real estate, Tiffany will have its old home to go back to.

Bogliolo said the renovation planning began two years ago and that demolition had started on the upper floors. “The plan is to bring more value to the building and to expand the space for the customer.”

The facade and first floor will be cleaned and updated in a respectful way, while the floors higher up will get more modern treatments. And while one shareholder said the rumor was couples would be able to get married at the location, the ceo said he wasn’t sure about weddings, but that there would be room for plenty of proposals and VIP events.

Arnault has not yet said just what his plans are for Tiffany’s. But they’re coming shortly — the deal is expected to close midyear.

“This approval is a significant milestone as we move closer to completing our acquisition of Tiffany, an iconic company with a rich heritage and unique positioning in the global luxury jewelry market,” Arnault said. “A globally recognized symbol of love, Tiffany will be an outstanding addition to our unique portfolio of luxury brands. We look forward to welcoming Tiffany into the LVMH family and helping the brand reach new heights as an LVMH Maison.”

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