LVMH, the world's leading luxury retailer, plans to take control of the chic Italian jeweller Bulgari in a deal worth about $3.7 billion (Dh19.06bn).
Bulgari the latest jewel for LVMH
The world's largest luxury conglomerate, with brands including Louis Vuitton and Givenchy, has just added another sparkling jewel to its crown.
LVMH plans to take control of the Italian jeweller Bulgari for €3.7 billion (Dh19.06bn), it announced yesterday. Both companies have a big presence in Dubai Mall and are among the best-known luxury brands in the UAE.
Louis Vuitton recently doubled the size of its boutique in the Mall of the Emirates. Luca Solca, a luxury goods analyst at Bernstein Research, said the Bulgari deal made "strategic sense", as it was one of the best-known jewellery brands in the world and could benefit greatly from LVMH's global reach. The deal also strengthened a key area of LVMH's portfolio.
"Watches and jewellery is indeed one of the weakest product areas at LVMH … Bulgari brings a potential mega brand to its lineup," Mr Solca wrote in a research note.
LVMH will buy 50.4 per cent of Bulgari, which will involve issuing 16.5 million shares in exchange for 152.5 million shares held by the Bulgari family.
The move comes less than three months after LVMH bought a major stake in Hermes, its French rival.
While sales of luxury goods were hard hit by the global economic downturn, consumer appetite for high-end and exclusive products began to rebound last year, the consultancy Bain & Company said.
After worldwide luxury sales dipped in 2009 by about 8 per cent, they rose by an estimated 10 per cent last year, Bain said.
LVMH's revenues outpaced that forecast, rising by 19 per cent last year compared with 2009 and exceeding the €20bn mark for the first time.
Its fastest-growing category was watches and jewellery, with revenues increasing by 29 per cent to €764m.
The second-fastest growing categories were wines and spirits and selective retailing, with revenues in each category growing by 19 per cent last year on 2009.