gaining mutual value through mergers between well known fashion brands case study applied ma activity between lvmh and tiffany co

The process of negotiation and merger between LVMH and Tiffany & Co.. Board of Directors accepts LVMH''''s ew n offer New merger agreement confirmed, lawsuit dropped 2021 7/1 LVMH complete

OVERVIEW

General introduction of the negotiating parties

Objectives

6 Nguyen Thi Thanh Nhan 72101312 - 3.4 Evaluation

- 3.2.1 Applying the theory of Tiffany and LVMH

8 Phan Le Thuy Nhien 72101121 - Chapter 4: Solution

1.2 General introduction of the negotiating parties 15

2.1 BATNAs (Best Alternative To a Negotiated Agreement) 19

2.2 ZOPA (Zone of possible agreement) 20

3.2.1 Applying theory in the case study 23

3.2.2.1.2 LVMH Goods and Jewelry Co 28

3.3 The scenario in negotiations between LVMH and Tiffany & Co 30

3.3.1 Scenario 1: Richemont - a competitor of LVMH proposes to acquire Tiffany & Co 31

3.3.2 Scenario 2: LVMH pressures prices as Tiffany & Co faces challenges 32

3.3.3 Scenario 3: LVMH and Tiffany & Co collaborate to expand the luxury jewelry market 33

4.1 Solutions to problems that have occurred in the past 37

LIST OF TABLES Table 1: Timeline of the merger between LVMH and Tiffany & Co 16 Table 2: Scenario in negotiations between LVMH and Tiffany & Co 30

Chart 1.1: Growth rate of luxury goods industry in the period of 2013 - 2025 13

Chart 1.2: GDP growth rate in the period 2016 - 2020 14

Chart 1.3: Market value of luxury goods in Vietnam 15

Chart 3.1: LVMH's earnings statement for 2020 - 2022 29

Chart 3.2: Tiffany & CO.'s brand value 2020-2023 30

Figure 1.1: Timeline 4 stages of COVID-19 in Vietnam 11

Figure 2.1: The relationship between each party's best alternative to the negotiated agreement (seller and buyer) 19

Figure 2.2: About ZOPA of the two sides 21

Figure 3.1: Members of LVMH Goods and Jewelry Co 25

Form 3.2: ZOPA of LVMH and Tiffany & Co 26

Figure 3.3: Brands of the Richemont Group 31

We extend our sincere appreciation to Ton Duc Thang University and the Faculty of Business Administration for their invaluable support and facilitation in completing our report on Business Negotiation We are particularly grateful to Mr Tran Khanh for his guidance and assistance throughout the project.

We would like to sincerely thank Mr Tran Khanh, teacher of Business Negotiation and Negotiation, for taking the time and effort to guide and guide us throughout the research and implementation of the report This subject requires a deep understanding of negotiation techniques and the ability to negotiate in a business environment Thanks to his dedicated guidance, we had the opportunity to better understand negotiation strategies, communication skills, and how to apply them in practice

We have completed our report, however, due to deficiencies in experience and knowledge, we are aware that there are aspects that need to be improved We look forward to receiving sincere and useful comments from Mr Tran Khanh so that we can improve and improve the quality of this research project Once again, we sincerely thank him for his valuable support and teaching during his time studying this subject

In its report published in 2020, the International Monetary Fund (IMF) warned of the impact of the COVID-19 pandemic on every region of the globe, leading to a low decline in world GDP, a 4.9% decline compared to 2019, a higher decline than the 1.7% decline during the 2008 financial crisis The Organization for Economic Co operation and - Development (OECD) has also forecast that if the COVID 19 pandemic breaks out for a - second time, global GDP could fall by -7.6%.

This is the first time that countries around the world have had to implement unprecedented measures such as lockdowns, social distancing, border closures, and the suspension of many service activities such as aviation and tourism The impact of the pandemic has caused severe disruptions in economic activities, disrupting production and supply chains This could lead to an economic recession that could be the worst in modern history

Figure 1.1: Timeline 4 stages of COVID-19 in Vietnam

In 2021, the World Tourism Organization (UNWTO) projected that the COVID-19 pandemic had created huge losses to the global economy, estimated at $2.4 trillion due to the collapse of the international tourism industry In the list of countries suffering the highest losses in GDP due to the decline in tourism, there are the appearance of Turkey (-

9.1%), Ecuador ( 9%), South Africa ( 8.1%), Ireland ( 5.9%) According to a UN report, - - - the number of international tourists decreased by about 1 billion, meaning a 73% decrease in 2020 In the first quarter of 2021, the decline amounted to 88% The hardest hit regions are Northeast Asia, Southeast Asia, Oceania, North Africa and South Asia; while North America, Western Europe and the Caribbean were less affected The International Labour Organization (ILO) has also assessed the impact of the COVID-19 pandemic on tourism employment in Asia and the Pacific The ILO report said that the Philippines, Viet Nam, Thailand, Brunei and Mongolia lost 1/3 of their jobs due to COVID-19, with job losses in tourism-related industries 4 times higher than other industries in 2020.

Despite the COVID-19 pandemic, the global luxury sector witnessed a significant downturn in 2020, with sales dropping by 20% to €1 trillion The hardest-hit category was personal luxury goods, which saw a decline of 23% from 2019 to 2020 This shift in the luxury market was driven by two primary factors: the rise of Asia as the dominant region for luxury consumption, and the increased adoption of online distribution channels due to pandemic-related restrictions.

After a bad 2020, the L&F sector showed some resilience and started to recover in

2021 According to Bain, the luxury market grew 13 to 15 percent from 2020 and reached

$1.14 trillion, although volumes were 9 to 11 percent lower than in 2019 The global luxury jewelry market is expected to reach USD 1.09 trillion in revenue by 2023 with a steady annual growth rate of 4.39% (CAGR 2023-2026)

Chart 1.1: Growth rate of luxury goods industry in the period of 2013 - 2025

Source: Statista, 2023 According to the division of the Ministry of Health, up to this point, Vietnam has gone through four important stages since the emergence of the Covid-19 epidemic Although Vietnam has well controlled the Covid-19 epidemic, the economy is still heavily affected According to the General Statistics Office, 85.7% of the 126,565 businesses surveyed in the early stages of the epidemic reported that they were affected Industries such as aviation, accommodation services, food services, travel agencies, education and training, textiles, leather manufacturing, electronic products and automobiles all face major difficulties, with impact rates exceeding 90% In particular, the service and tourism industries are the sectors that most clearly reflect the negative impact from the Covid-19 pandemic Sectors such as tourism and transport, especially air transport, have experienced severe declines, mainly due to movement restrictions and social distancing measures In the first 6 months of 2020, the number of international visitors decreased by 55.8% compared to the same period last year (while Q1 decreased by 18%), and domestic visitors also decreased by 27.3% (Q1 decreased by 6%) Industry revenue decreased by 77.8%, which is much higher than the 11% decline of Q1 2020

Chart 1.2: GDP growth rate in the period 2016 - 2020

Source: CafeF, 2021 However, at the second stage of the Covid-19 epidemic, i.e in Q3 and Q4 2020, there were positive signs of recovery and prosperity in economic sectors Domestic product (GDP) in Q3 and Q4 of 2020 grew by 2.62% and 4.48%, respectively, after struggling in Q2 with just 0.36% This dragged the overall growth of Vietnam's economy in 2020 to 2.91%, the lowest increase in 10 years Notably, Vietnam has achieved great success with the highest growth rate in 2020 in the world, despite facing the negative impact of the complicated Covid-19 epidemic

Moving into the first months of 2021, Vietnam has faced the third wave of the Covid-

19 epidemic and the fourth phase of outbreak again, with the emergence of new variants, rapidly evolving and complicated However, overall, Vietnam's economic picture in the first 5 months of 2021 remained stable and recorded positive results in many different fields

In Vietnam, the high-end jewelry market is recovering from the pandemic However, the macroeconomic downturn has led to a decrease in consumer spending, including on luxury goods In Q2 2023, gold demand in Vietnam will decrease by 9% compared to the same period last year The gold jewellery segment also recorded a decline from 4.5 tonnes in Q2 2022 to 3.7 tonnes in Q2 2023, representing an 18% year- -on year decline Despite the challenges, the luxury goods market is still expected to grow in the long term

Chart 1.3: Market value of luxury goods in Vietnam

1.2 General introduction of the negotiating parties

Tiffany & Co was founded in 1837 by Charles Lewis, Tiffany and John B Young in New York City, as a "stationery and fancy goods store." The store originally sold a variety of stationery items and operated as "Tiffany, Young and Ellis" at 259 Broadway in Lower Manhattan The name was shortened to Tiffany & Company in 1853, when Charles Tiffany took control and established the company's emphasis on jewelry Since then, the company has opened stores in major cities worldwide and is famous for its luxury goods, especially silver and diamond jewelry In 2018, net sales reached $4.44 billion As of 2023, Tiffany already operates more than 300 stores globally, in multiple countries including the United States, Japan, and Canada, as well as Europe, Latin America, and the Asia-Pacific region, and is exploring opportunities in Africa Some of Tiffany & Co's competitors include Cartier, Harry Winston, Bvlgari, Chopard Group, and Swarovski

By combining Louis Vuitton and Moởt Hennessy in 1987, Bernard Arnault created LVMH, the world's largest conglomerate in luxury goods LVMH has operations in the United States, the Middle East, Asia and Europe Its headquarters are in Paris, France The group comprises 75 reputable brands (or companies) in six industries, including fashion and leather goods, watches and jewelry, wine and spirits, perfumes and cosmetics, select retail, and others

LITERATURE REVIEW

ZOPA (Zone of possible agreement)

- 1.2 General introduction of negotiating parties

6 Nguyen Thi Thanh Nhan 72101312 - 3.4 Evaluation

Integrative negotiations

8 Phan Le Thuy Nhien 72101121 - Chapter 4: Solution

1.2 General introduction of the negotiating parties 15

2.1 BATNAs (Best Alternative To a Negotiated Agreement) 19

2.2 ZOPA (Zone of possible agreement) 20

3.2.1 Applying theory in the case study 23

3.2.2.1.2 LVMH Goods and Jewelry Co 28

3.3 The scenario in negotiations between LVMH and Tiffany & Co 30

3.3.1 Scenario 1: Richemont - a competitor of LVMH proposes to acquire Tiffany & Co 31

3.3.2 Scenario 2: LVMH pressures prices as Tiffany & Co faces challenges 32

3.3.3 Scenario 3: LVMH and Tiffany & Co collaborate to expand the luxury jewelry market 33

4.1 Solutions to problems that have occurred in the past 37

LIST OF TABLES Table 1: Timeline of the merger between LVMH and Tiffany & Co 16 Table 2: Scenario in negotiations between LVMH and Tiffany & Co 30

Chart 1.1: Growth rate of luxury goods industry in the period of 2013 - 2025 13

Chart 1.2: GDP growth rate in the period 2016 - 2020 14

Chart 1.3: Market value of luxury goods in Vietnam 15

Chart 3.1: LVMH's earnings statement for 2020 - 2022 29

Chart 3.2: Tiffany & CO.'s brand value 2020-2023 30

Figure 1.1: Timeline 4 stages of COVID-19 in Vietnam 11

Figure 2.1: The relationship between each party's best alternative to the negotiated agreement (seller and buyer) 19

Figure 2.2: About ZOPA of the two sides 21

Figure 3.1: Members of LVMH Goods and Jewelry Co 25

Form 3.2: ZOPA of LVMH and Tiffany & Co 26

Figure 3.3: Brands of the Richemont Group 31

First of all, we would like to express our deep gratitude to Ton Duc Thang University and the Faculty of Business Administration, especially Mr Tran Khanh, for the support and facilitation we have received to carry out the report on Business Negotiation

We would like to sincerely thank Mr Tran Khanh, teacher of Business Negotiation and Negotiation, for taking the time and effort to guide and guide us throughout the research and implementation of the report This subject requires a deep understanding of negotiation techniques and the ability to negotiate in a business environment Thanks to his dedicated guidance, we had the opportunity to better understand negotiation strategies, communication skills, and how to apply them in practice

Despite limitations in experience and expertise, we acknowledge areas for improvement in our report We eagerly anticipate valuable feedback from Mr Tran Khanh to enhance the research quality We express our sincere gratitude for his guidance and support during our academic journey.

In its report published in 2020, the International Monetary Fund (IMF) warned of the impact of the COVID-19 pandemic on every region of the globe, leading to a low decline in world GDP, a 4.9% decline compared to 2019, a higher decline than the 1.7% decline during the 2008 financial crisis The Organization for Economic Co operation and - Development (OECD) has also forecast that if the COVID 19 pandemic breaks out for a - second time, global GDP could fall by -7.6%.

This is the first time that countries around the world have had to implement unprecedented measures such as lockdowns, social distancing, border closures, and the suspension of many service activities such as aviation and tourism The impact of the pandemic has caused severe disruptions in economic activities, disrupting production and supply chains This could lead to an economic recession that could be the worst in modern history

Figure 1.1: Timeline 4 stages of COVID-19 in Vietnam

In 2021, the World Tourism Organization (UNWTO) projected that the COVID-19 pandemic had created huge losses to the global economy, estimated at $2.4 trillion due to the collapse of the international tourism industry In the list of countries suffering the highest losses in GDP due to the decline in tourism, there are the appearance of Turkey (-

9.1%), Ecuador ( 9%), South Africa ( 8.1%), Ireland ( 5.9%) According to a UN report, - - - the number of international tourists decreased by about 1 billion, meaning a 73% decrease in 2020 In the first quarter of 2021, the decline amounted to 88% The hardest hit regions are Northeast Asia, Southeast Asia, Oceania, North Africa and South Asia; while North America, Western Europe and the Caribbean were less affected The International Labour Organization (ILO) has also assessed the impact of the COVID-19 pandemic on tourism employment in Asia and the Pacific The ILO report said that the Philippines, Viet Nam, Thailand, Brunei and Mongolia lost 1/3 of their jobs due to COVID-19, with job losses in tourism-related industries 4 times higher than other industries in 2020.

The COVID-19 pandemic had a significant impact on the luxury sector, leading to the first decline in the jewelry market in nearly a decade and a shift in dominance from Europe and North America to Asia The pandemic forced businesses to rethink their distribution channels, with many ramping up their online presence to compensate for the closure of physical stores As a result, luxury brands allowed retailers to distribute their items online for the first time, leading to €1 trillion in sales for the global luxury category in 2020 However, personal luxury goods experienced a 23% decline between 2019 and 2020, marking the first contraction since 2009.

After a bad 2020, the L&F sector showed some resilience and started to recover in

2021 According to Bain, the luxury market grew 13 to 15 percent from 2020 and reached

The global luxury jewelry market remains resilient despite market challenges, generating $1.14 trillion in revenue in 2021 However, volumes were lower compared to pre-pandemic levels The industry is projected to expand at a steady pace, reaching $1.09 trillion by 2023 and maintaining an annual growth rate of 4.39% through 2026.

Chart 1.1: Growth rate of luxury goods industry in the period of 2013 - 2025

Source: Statista, 2023 According to the division of the Ministry of Health, up to this point, Vietnam has gone through four important stages since the emergence of the Covid-19 epidemic Although Vietnam has well controlled the Covid-19 epidemic, the economy is still heavily affected According to the General Statistics Office, 85.7% of the 126,565 businesses surveyed in the early stages of the epidemic reported that they were affected Industries such as aviation, accommodation services, food services, travel agencies, education and training, textiles, leather manufacturing, electronic products and automobiles all face major difficulties, with impact rates exceeding 90% In particular, the service and tourism industries are the sectors that most clearly reflect the negative impact from the Covid-19 pandemic Sectors such as tourism and transport, especially air transport, have experienced severe declines, mainly due to movement restrictions and social distancing measures In the first 6 months of 2020, the number of international visitors decreased by 55.8% compared to the same period last year (while Q1 decreased by 18%), and domestic visitors also decreased by 27.3% (Q1 decreased by 6%) Industry revenue decreased by 77.8%, which is much higher than the 11% decline of Q1 2020

Chart 1.2: GDP growth rate in the period 2016 - 2020

In Vietnam, the high-end jewelry market is recovering from the pandemic However, the macroeconomic downturn has led to a decrease in consumer spending, including on luxury goods In Q2 2023, gold demand in Vietnam will decrease by 9% compared to the same period last year The gold jewellery segment also recorded a decline from 4.5 tonnes in Q2 2022 to 3.7 tonnes in Q2 2023, representing an 18% year- -on year decline Despite the challenges, the luxury goods market is still expected to grow in the long term

Chart 1.3: Market value of luxury goods in Vietnam

NEGOTIATION ANALYSIS

S ummarise the case study

The acquisition between LVMH and Tiffany & Co was a complex and dramatic series of events that unfolded over several months The tensions and negotiations not only highlighted the intricacies of large-scale mergers and acquisitions but also showcased the influence of political factors and the dynamics of the luxury goods industry

In November 2019, LVMH Moởt Hennessy Louis Vuitton SE (LVMH), a global leader in luxury goods, announced plans to acquire Tiffany & Co., one of America's most prominent jewelry brands The deal is considered one of the largest acquisitions in the history of the luxury industry, valued at about $16.2 billion However, the deal faced many challenges and obstacles During negotiations, there were conflicts between LVMH and Tiffany & Co over brand value and contracts In particular, LVMH expressed concern about the impact of the trade war between the U.S and China on Tiffany & Co.'s international expansion plans

After months of negotiations, in September 2020, LVMH announced that it would back out of the acquisition due to the "significant fluctuations" it experienced Tiffany &

Amidst a legal dispute that briefly hindered the transaction, luxury conglomerate LVMH and renowned jeweler Tiffany & Co resolved their differences in October 2020 French governmental pressure allegedly prompted LVMH to delay the deal, but ultimately, a settlement was reached LVMH acquired Tiffany & Co for approximately $15.8 billion in January 2021, marking the culmination of the legal battle and the commencement of a new era for both esteemed brands.

A nalyze the case study

3.2.1 Applying theory in the case study

According to the above-mentioned BATNA definition, it is easy to see that large enterprises such as LVMH and Tiffany have applied this theory in mergers between the two companies For the large scale of Tiffany jewelry - the icon of the American jewelry industry, Tiffany can make the decision to merge with the largest global luxury corporations and have stronger financial resources to transfer such as Kering Group, Richemont Group, Labelux Group, etc These are all foreign corporations capable of acquiring jewelry brands Tiffany with a deal value in the billions However, LVMH is a European corporation and a tycoon of famous fashion and accessories brands including Hublot, Tag Heuer, Zenith, Bvlgari are aspiring to develop the market in the US Meanwhile, Tiffany faces many difficulties such as tariffs due to the trade war between the US and China, and lower domestic sales taxes in China contributed to a deep decline in sales Facing that difficulty, the merger with LVMH could both help Tiffany & Co escape quarterly reporting at a time when the luxury market is showing signs of slowing, but also own a powerful diamond and give Tiffany a new foothold in the U.S market.

With LVMH's BATNA, this is an opportunity for the group to enter the US market When LVMH said it was at risk of pulling out of its deal with Tiffany & Co in September

2020, it was planning to be interested in an alternative to Cartier's parent company, Cie Financiere, Richemont SA Unlike Tiffany & Co., Cartier is not only a pure jewelry brand, but also owns a watch empire and Montblanc pens and a collection of fashion-accessory brands including Chloe and Dunhill Cartier is headquartered in Geneva with a market capitalization of about 35 billion Swiss francs (about $38 billion) Assuming a premium of 30% as investors typically expect, the asking price would be around 45.5 billion francs, three times Tiffany's selling price It's tempting to think that LVMH could do both transactions, but that wouldn't be realistic, as the group would have to pay a 30% larger premium to Richemont

To strengthen its dominance, LVMH can enhance the image and status of its prominent brands like Louis Vuitton, Dior, Fendi, and Givenchy This would not only allow for the expansion of LVMH's existing product categories but also present the opportunity to tap into untapped markets and customer segments.

In particular, LVMH can affirm the position of these brands by increasing investment in research and development, creating new and unique products, and maintaining continuous innovation The Group can aim to expand its stores, strengthen its marketing strategy, and create innovative advertising campaigns to attract customers' attention The selection of BATNA helps LVMH strengthen their pioneering position, adapt to market fluctuations and respond to the diverse needs of customers.

Figure 3.1: Members of LVMH Goods and Jewelry Co.

As analyzed above, the negotiating parties will endeavor to find a solution to reach a common goal In the merger between LVMH and Tiffany & Co, the initial price LVMH was willing to buy was $120 per share At the same time, the lowest price that Tiffany is willing to sell is $ 131.5 / share, this is the minimum price that the brand sells after many intense negotiations After negotiations, the two sides offered a final agreed price of

This means that ZOPA for this deal ranges from $131 per share to $135 per share Based on this information, both parties can offer a price in this range, namely $131.5 per share, which is within ZOPA and is an acceptable price for both parties

The luxury fashion industry's largest merger between LVMH and Tiffany came to fruition, and the two companies announced an agreement at the end of October, with LVMH paying $131.50 per share and merging with Tiffany The discount saved LVMH $440 million, less than 1% of its 2019 revenue But that savings were cut by $141 million when Tiffany paid dividends in August and December, something LVMH could have avoided by completing the deal faster

Form 3.2: ZOPA of LVMH and Tiffany & Co

By acquiring Tiffany to its group, LVMH will be able to achieve double sales in the watch & jewelry segment – LVMH's newest and smallest business segment at the moment

In 2020, trading watches and jewelry from 6 luxury brands such as Bvlgari, Hublot, Zenith bringing in revenue of $4.53 billion (9% of LVMH's total revenue last year) The decision to buy Tiffany & Co shows that LVMH wants to focus on jewelry, because despite also making watches, 92% of Tiffany & Co.'s total sales come from jewelry while watches account for only a small share However, this could also be an opportunity for Tiffany &

Co to expand watchmaking in the future

LVMH's acquisition of Tiffany & Co marked a transformative chapter for both brands In 2019, LVMH expressed its intent to acquire Tiffany for $14.5 billion While Tiffany initially hesitated, ultimately a deal was struck that valued the iconic jeweler at $135 per share, resulting in a $15.8 billion acquisition This strategic move was viewed as mutually beneficial, with LVMH gaining access to Tiffany's legacy and brand equity, while Tiffany secured the resources of a global luxury conglomerate.

Although previously negotiated, LVMH proposed the acquisition price of Tiffany company at $16.2 billion, after amending and adding some terms during negotiations, LVMH has acquired luxury jewelry brand Tiffany & Co with a deal value of $ 15.8 billion, or $131.50 per share, down from $135 per share in the original deal In this case, it is understandable that compared to the originally agreed sale price and the sale price at this time, Tiffany & Co suffered a relatively large loss of $ 400 million Although the final agreed price was significantly reduced from the original price, Tiffany & Co.'s volatile market and somewhat volatile business situation contributed to the completion of the deal, so the company accepted a reduced price for the deal

In fact, the acquisition price has dropped by about $400 million, at $15.8 billion, Tiffany's brand value is valued higher than before, from $14.5 billion to $15.8 billion Meanwhile, LVMH Group also achieved the negotiating goal of reducing the price paid when participating in this deal instead of $ 16.2 billion to only $ 15.8 billion In addition, with the acquisition of Tiffany & Co., LVMH has helped LVMH expand its product portfolio and strengthen its position in the global jewelry market Tiffany & Co can also leverage LVMH's distribution channels to reach new customers

In short, LVMH's acquisition of Tiffany & Co has benefited both parties Tiffany

& Co was able to reach new customers through LVMH's distribution channel, while LVMH expanded its product portfolio and strengthened its position in the global jewelry market

Tiffany faced many difficulties In just the first six months of 2019, Tiffany's revenue fell by 3% In addition to tariffs caused by the trade war between the U.S and China, higher domestic sales tariffs in China have also created a deep decline in sales.

However, Tiffany has coped with ongoing difficulties, especially in China, the main market where it operates Tiffany & Co recorded high sales during the 2020 Christmas The company said online shopping and sales both increased sharply, especially in the Chinese market In the period from Nov 1 to Dec 31, net sales from all operations grew 2% Notably, online sales have increased by 80%, which is a clear sign of the transformation and preference of customers for Tiffany & Co's online shopping experience

On the other hand, the Asia-Pacific region has also contributed strongly to this positive result with a 20% growth in sales In particular, in China, an important market for

Tiffany, sales have increased by 50%, proving the brand's attractiveness and reputation in the Chinese consumer community LVMH Group believed that Tiffany had limitless potential and made its initial offer of $120 per share, but Tiffany's board of directors declined. The Tiffany brand conducted an assessment of the company's profitability and growth potential to determine the true value of Tiffany & Co and found that the price LVMH offered was too low LVMH on Nov 20 raised its proposed price to buy Tiffany from $14.5 billion to $16 billion, meaning LVMH raised its price to $135 per share The board faced a difficult decision between accepting this offer and sticking to its stance on company values The decision was made after careful discussion and consideration by board members on all aspects of the deal.

3.2.2.1.2 LVMH Goods and Jewelry Co

The scenario in negotiations between LVMH and Tiffany & Co

STT Scenario LVMH Tiffany & Co

1 Richemont - a competitor of LVMH proposes to acquire Tiffany & Co

2 LVMH pressures prices as Tiffany & Co faces challenges

3 LVMH and Tiffany & Co collaborate to expand the luxury jewelry market

Table 2: Scenario in negotiations between LVMH and Tiffany & Co

3.3.1 Scenario 1: Richemont - Competitor of LVMH proposes to cquire a Tiffany &

Compagnie Financiere Richemont S.A is a Swiss luxury goods company founded by South African entrepreneur Anton Rupert Richemont SA operates through its subsidiaries to design, manufacture, distribute and sell high-end jewelry, watches, leather goods, musical instruments, weapons, clothing and accessories Richemont owns a diverse portfolio of brands in the jewelry and watch sectors, including Cartier, Van Cleef & Arpels, IWC, and many others Richemont holds the second position in the global luxury goods industry after LVMH and ranks sixth in terms of overall market capitalization in Switzerland

Figure 3.3: Brands of the Richemont Group

In November 2019, LVMH proposed to acquire Tiffany & Co for $16.2 billion, causing a seismic shift in the fashion and luxury jewelry industry Soon after, realizing the brand value that Tiffany brings, Richemont quickly jumped on the acquisition offer for

$ 16.3 billion However, Richemont Group announced that it would sign a formal contract in early 2021 because Richemont Group had just completed the acquisition of the long- established Italian jewelry brand Buccellati in late September 2019, so it will no longer be able to turn around capital to buy Tiffany immediately The negotiating situation between LVMH and Tiffany could become more complicated if Richemont, another company in the fashion and jewelry industry, makes an offer to acquire Tiffany

This could lead to competition between the two large corporations, posing numerous challenges and decisions for Tiffany's leadership and shareholders The competition between LVMH and Richemont could lead to an auction, increasing the value of Tiffany While this might please Tiffany's shareholders, it also raises pressure on LVMH and Richemont to ensure they do not overpay

Tiffany recognizes that Richemont had 3 famous jewelry brands: Cartier, Van Cleef

& Arpels and Buccellati This deal may carry significant risks and may not bring much value to Tiffany Meanwhile, LVMH is a perfect choice because they are also targeting the European and Chinese markets as the strategic direction of Tiffany & Co The merger between LVMH and Tiffany could create global shared value, especially since both companies have significant influence in the world of luxury brands, their combination could form a powerful pillar in the jewelry and luxury industry

3.3.2 Scenario 2: LVMH pressures prices as Tiffany & Co faces challenges

In 2020, amid the escalating pandemic and severe global economic repercussions hinting at a recession, the luxury industry bore the brunt, with Tiffany & Co is no exception The brand faced more dire circumstances compared to rivals such as Chanel and Kering A large portion of Tiffany & Co's sales come from tourists, who disappeared when countries imposed restrictions Social distancing measures have forced many stores to close temporarily or reduce operating hours, which has impacted Tiffany & Co's ability to reach and serve customers In the first six months of the year, global sales for Tiffany & Co plummeted by 29%, reaching only $747.1 million USD Investors perceived the company's business operations as excessively subdued

In light of the challenging situation, LVMH swiftly proposed a reduced acquisition price of $15.7 billion, coupled with an accelerated contract signing This enabled Tiffany to address its debt obligations The adjusted acquisition price represented a favorable outcome for LVMH, as it allowed for increased profit margins and reduced financial strain Moreover, LVMH strengthened its negotiating position, enabling it to secure more advantageous terms from Tiffany.

This event was considered "a good move" when billionaire Bernard Arnault pressed the deal price to a low level However, it could lead to disappointment and concerns from

Tiffany and its shareholders, creating a less positive negotiating environment The relationship between the two companies could suffer, and Tiffany might explore alternative options if they dissatisfied with the terms of the acquisition

The negotiation process between LVMH and Tiffany & Co had become a prominent point in the luxury industry and had attracted both media attention and the business community The relationship between these two companies had demonstrated the extent of the impact of the COVID-19 pandemic on the luxury market and how businesses in this industry face unexpected challenges

3.3.3 Scenario 3: LVMH and Tiffany & Co collaborate to expand the luxury jewelry market

An integral part of Mr Arnault's brand development strategy is to extend LVMH's appeal beyond its core markets of the U.S and Japan He shared that he recognizes "a lot of untapped potential, especially in the European and Chinese markets."

Flavio Cereda, an analyst at Jefferies, also shared his views: "If you want to expand the diversity in the luxury category, you can buy many small companies, but there are no really big companies are really big Everyone wants to own a Rolex or Patek Philippe, but they are not officially sold So, this is a unique big opportunity." Large conglomerates such as LVMH, Kering and Richemont have all grown through acquisitions while smaller ones seek the security of larger conglomerates, such as Versace, which was sold to Michael Kors, now Capri Holdings, for $2 billion at the end of 2018.

Furthermore, Tiffany is a symbol of American class and style, in Arnault's words,

"For a long time, Tiffany has always attracted me with its exquisite beauty, and it is truly a perfect addition to LVMH's luxury collection This is the only American luxury brand that

I believe will bring long lasting- vitality and maintain its position in the international commercial world." LVMH's acquisition of Tiffany will elevate them to a leading position in the branded jewelry market, one of the most positively performing luxury categories in

2018 and predicted to increase by 7% in 2019, according to Bain's consulting experts After incorporating Tiffany into its collection, LVMH will raise its market share to 18.4%, double that of Richemont which stands at 14.8%, according to information from Bloomberg Intelligence

LVMH will adopt a similar strategy as with Bvlgari Under LVMH's management, Bvlgari's sales have doubled and profits have increased 5 times Accordingly, LVMH will invest in expanding the store network to enhance presence; focus on developing product lines, while reinforcing marketing and communication strategiesto elevate the Tiffany &

Evaluation

After researching and analyzing from many different perspectives, the authors found that scenario 3 – LVMH and Tiffany & Co working together to expand the luxury jewelry market – is the most optimal option This business transaction helps to increase the overall value of the brand in the luxury jewelry sector, the benefits that the two parties achieve after the merger are not small, they are based on a positive, fair and dynamic attitude

The strategic alliance between LVMH and Tiffany & Co consolidates their brand reputation and credibility This alliance expands LVMH's presence in the jewelry industry and the U.S market, while enhancing Tiffany's reach in Asia-Pacific and Europe This collaboration offers opportunities for shared knowledge, increased capacity, and enhanced creativity Similar to LVMH's partnership with Bvlgari, this merger aims to create unique products and services, bolster brand value, expand markets, and attract a wider, younger customer base.

LVMH plans to expand its reach beyond its traditional soft market offerings (e.g., apparel, handbags) into the lucrative hard market of watches and jewelry This diversification into the fastest-growing segment of the industry will strengthen LVMH's watch and jewelry division, allowing it to compete more effectively with Richemont's brands like Cartier and Van Cleef & Arpels LVMH projects sales growth of $9.6 billion in this sector, and analysts anticipate that this expansion will benefit other LVMH brands in the same industry.

In addition to the benefits, the cooperation of LVMH and Tiffany & Co also brings some difficulties as follows:

First, the expansion of the luxury market and jewelry sector requires large investments in research and development, production, marketing and distribution For companies like LVMH and Tiffany & Co., ensuring they possess adequate financing and resources is paramount to navigate the challenges and capitalize on opportunities in this highly competitive industry

Second, the company faces the risk of losing benefits from external stakeholders: Consumers face the increasing price, rivals introduce competitive measures to increase pressure on LVMH and Tiffany & Co As a result, LVMH and Tiffany & Co will have to find ways to attract and retain customers, develop new products, and create effective marketing strategies

Effective brand management is crucial for the success of the LVMH and Tiffany & Co collaboration Both companies have established reputations in the luxury and jewelry sectors, and it is essential to maintain and enhance these brands' value and reputation To achieve this, LVMH and Tiffany & Co must collaborate effectively in creating and delivering high-quality jewelry products They must also continuously update their expertise and skills in product management, production processes, and business operations.

Despite the difficulties, LVMH and Tiffany & Co are both businesses with enough experience and resources to overcome any challenges The strategic partnership between these two iconic brands holds the potential to unlock long term opportunities and deliver - significant benefits for the expansion of the luxury market and jewelry sector.

SOLUTION

Solutions to problems that have occurred in the past

Overall, LVMH and Tiffany & Co achieved their own goals after these talks However, the negotiations still have many problems on both sides, making the negotiation and agreement process last up to 2 years Therefore, from the perspective of a third party, if there is an opportunity to come back at the time when the 2 parties make a decision, the author proposes some solutions to solve these problems

First, both LVMH and Tiffany & Co kept important information about the deal secret and especially avoided taking the case to court

When negotiations occur, it will become a topic of conversation all over the world Opinions or trivia and inaccurate speculations can affect the credibility of both parties LVMH announced that it would back out of the acquisition due to the "significant fluctuations" it experienced in September 2020, which led Tiffany & Co to file a lawsuit against LVMH for failing to live up to its contractual commitments The situation became complicated and raging causing the reputation and reputation of the two sides to be more or less affected Therefore, it is best not to disclose information related to the negotiation, the purpose is so that the agreement between the two parties takes place quickly and both parties make the best decisions

At the same time, LVMH avoided bringing the case into a legal battle, when facing the strong resistance of Tiffany & Co LVMH aspires to dominate the US market and push to China, Tiffany & Co is an effective assistant for LVMH to realize its ambition Therefore, taking the case to court is completely disadvantageous for both of them, it prolongs the time and costs a lot of useless money in the negotiation

Second, don't negotiate too much

During the negotiations, there were conflicts between LVMH and Tiffany & Co over brand values and contracts, which led to months of negotiations and unnecessary issues Tiffany & Co should offer from the outset a price they feel happy to make it easier for both parties to negotiate Multiple negotiations over several months made LVMH think and worry about the trade war between the U.S and China over Tiffany & Co.'s international expansion plans

As a result, LVMH announced to the public that it would be withdrawing from the negotiations, which led to its voice and legal issues The two need to negotiate at the heart, and find appropriate common ground in the merger LVMH should also observe and evaluate Tiffany & Co.'s desire to make decisions as quickly as possible Prolonging the talks will likely make Tiffany & Co.'s crisis worse and both sides will miss out on other business opportunities

Finally, always keep the peace when negotiating so that both parties benefit The essence lies in preserving the relationship between the involved parties, preventing undue harm, and fostering a positive atmosphere to achieve a mutually beneficial agreement in negotiations A successful negotiation is one where both parties gain Consequently, adopting a rigid approach in the negotiation process could prove disadvantageous for both Tiffany & Co and LVMH This inflexibility diminishes the credibility and professionalism of these esteemed entities Rather than adhering strictly to a predefined stance, it is advisable to demonstrate trust and a willingness to engage in discussions This approach encourages both parties to collaborate, facilitating an agreement without resorting to legal action.

Solutions to future problems

It can be seen that after the merger both LVMH and Tiffany & Co have experienced outstanding growth, specifically on July 27, LVMH released its first half 2021 earnings - report, with a significant 53% increase in revenue compared to 2020, at $33.9 billion As for Tiffany & Co., the brand value grew from $4.966 million to $5.484 million However, in order to reduce the damage to both in the future, the authors would like to propose the following solutions:

First, strong communication on social networking sites such as Instagram, Facebook, Twitter, as well as the press

LVMH and Tiffany & Co leverage social media to showcase their groundbreaking merger, one of the luxury industry's most extravagant deals Effective communication on these platforms is crucial for ensuring that customers from both brands are informed and enticed to explore a broader range of products LVMH has the opportunity to share the narrative of the negotiation process, conveying its values alongside the essence of the

Tiffany & Co brand By featuring the diverse luxury brands within the LVMH family, they aim to capture the interest of potential customers Alternatively, a joint communication strategy can highlight collaborative collections like handbags and watches, fostering interactivity Crafting a unique and creative narrative enhances the combined offerings' appeal, attracting attention and potentially driving increased profits for both parties In this dynamic social media landscape, strategic storytelling becomes a powerful tool for making a lasting impact on the luxury market

Second, LVMH and Tiffany & Co need to know each other's strengths and weaknesses to support and plan

Tiffany & Co understands and almost holds the full market share of the jewelry industry in the US, where LVMH is aspiring to conquer, Tiffany & Co can act as a strategic advisor for LVMH in the jewelry sector in the US, bringing extensive information on trends, customer needs, and marketing strategies In contrast, LVMH can provide strong resources and backroom for Tiffany & Co to grow and scale globally In addition, having each party come up with a plan will help both partners achieve successful results, a clear understanding of the culture to reduce the problem and avoid inappropriate business strategies in different countries

Both parties need to cultivate a clear understanding of each other's corporate culture Recognizing and respecting differences in working styles, decision-making processes, and organizational values can help reduce potential conflicts and foster a collaboration Finally, enhance innovation and development

LVMH and Tiffany & Co can seek innovative ideas in the design and development of new products They can invest in creating unique and groundbreaking designs that are highly innovative to capture the attention and interest of customers As a leading luxury group in the world, LVMH uses its considerable resources to invest and manage Tiffany &

Co to create new and unique products For example, a handbag with a blue color of Tiffany

Through strategic collaborations, companies can unlock new opportunities For instance, LVMH's monogram logo could inspire a distinctive jewelry collection for Tiffany & Co., leveraging LVMH's luxurious materials and Tiffany & Co.'s design expertise This collaboration would differentiate the resulting products from competitors and create a unique competitive edge.

Growth rate of luxury goods industry in the period of 2013 - 2025

Source: Statista, 2023 According to the division of the Ministry of Health, up to this point, Vietnam has gone through four important stages since the emergence of the Covid-19 epidemic Although Vietnam has well controlled the Covid-19 epidemic, the economy is still heavily affected According to the General Statistics Office, 85.7% of the 126,565 businesses surveyed in the early stages of the epidemic reported that they were affected Industries such as aviation, accommodation services, food services, travel agencies, education and training, textiles, leather manufacturing, electronic products and automobiles all face major difficulties, with impact rates exceeding 90% In particular, the service and tourism industries are the sectors that most clearly reflect the negative impact from the Covid-19 pandemic Sectors such as tourism and transport, especially air transport, have experienced severe declines, mainly due to movement restrictions and social distancing measures In the first 6 months of 2020, the number of international visitors decreased by 55.8% compared to the same period last year (while Q1 decreased by 18%), and domestic visitors also decreased by 27.3% (Q1 decreased by 6%) Industry revenue decreased by 77.8%, which is much higher than the 11% decline of Q1 2020.

GDP growth rate in the period 2016 - 2020

In Vietnam, the high-end jewelry market is recovering from the pandemic However, the macroeconomic downturn has led to a decrease in consumer spending, including on luxury goods In Q2 2023, gold demand in Vietnam will decrease by 9% compared to the same period last year The gold jewellery segment also recorded a decline from 4.5 tonnes in Q2 2022 to 3.7 tonnes in Q2 2023, representing an 18% year- -on year decline Despite the challenges, the luxury goods market is still expected to grow in the long term.

Market value of luxury goods in Vietnam

LVMH's vast presence in the luxury sector is evident through its portfolio of renowned brands, including Bvlgari, Celine, Fendi, Givenchy, TAG Heuer, and Tiffany & Co Each brand boasts a rich history and distinct identity Collectively, they operate under the LVMH umbrella as individual entities, maintaining their unique heritage With 64.2 billion euros in revenue and 12 billion euros in net profit in 2021, LVMH reigns supreme as the industry leader Its global operations span 80 countries, employing over 175,000 individuals and operating over 5,500 stores worldwide.

One of LVMH's competitors is Richemont, another Switzerland-based luxury group that manufactures and sells luxury products such as jewelry, watches, fashion, and accessories The group owns many famous luxury brands such as Cartier, Van Cleef & Arpels, IWC, Schaffhausen, Montblanc, Dunhill, Chloé, Lancel

Table 1: Timeline of the merger between LVMH and Tiffany & Co The process of negotiation and merger between LVMH and Tiffany & Co

2019 24/11 LVMH officially announced a deal to buy Tiffany for $16.2 billion in its largest-ever acquisition

4/2 Tiffany & Co shareholders approve acquisition

24/8 Tiffany & Co exercised the option to delay the acquisition, the tentative deadline to complete the deal — Aug 24 — was missed

9/9 LVMH withdrew from the acquisition

Tiffany & Co files lawsuit against LVMH for violation of Merger Agreement

28/9 LVMH files lawsuit against Tiffany & Co in U.S court

29/9 Tiffany & Co responds to LVMH's lawsuit

26/10 European Union approves LVMH's acquisition of Tiffany & Co

29/10 Tiffany & Co Board of Directors accepts LVMH's ew n offer

New merger agreement confirmed, lawsuit dropped

2021 7/1 LVMH completes acquisition of Tiffany & Co., announces new CEO and CEO

Businesses may choose to collaborate or pursue other options in the global market in response to a variety of factors, including diminishing sales that result in losses or rivals acquiring a greater competitive edge Complex market fluctuations can hurt firms in a lot of ways As a result, the necessity for development drew companies with similar objectives and visions closer together, which ultimately resulted in the choice to collaborate and merge

The merger between LVMH and Tiffany & Co is an example of how large corporations can merge to create maximum value for themselves and their customers through a combination of assets, reputation, and resources The negotiation process of the deal began in 2019 LVMH has long been known as a leading brand in luxury retail The company is headquartered in Paris, France and controlled by billionaire Bernard Arnault, France's richest man This brand owns dozens of famous brands, including Louis Vuitton, Christian Dior, Blvgari, Fendi Meanwhile, Tiffany is facing many difficulties In addition to the tariffs caused by the trade war between the United States and China, lower domestic sales taxes in China had also deeply reduced sales Tiffany is headquartered in New York, USA and is famous for its expensive diamond engagement rings with over 300 retail stores worldwide

The LVMH-Tiffany & Co merger, the largest in the luxury sector, holds promise for both companies LVMH's acquisition of Tiffany's 14.8% market share in luxury jewelry would propel it past Richemont, positioning it with an 18.4% dominance Both companies share a focus on the lucrative Chinese market, where Tiffany & Co boasts a significant presence and LVMH's artistic investments align with Tiffany's efforts to support artists through exhibitions and partnerships.

In addition, Tiffany's coffee chain - Blue Box Café, also shares the same idea with

Le Café V or Louis Vuitton's Sugalabo restaurant in Osaka, Japan, stemming from the ambition to target millennial and Gen Z luxury consumers The development strategy of this brand is therefore associated with brand value positioning, in-store experience, in-store technology as well as personalized design Therefore, LVMH certainly cannot disregard this set of potential customers, as well as affirm its "big" position in the luxury business market

Within the limits of the article, the authors aim to achieve the following objectives:

• Clear understanding of business strategy analysis

• To evaluate the effectiveness of the deal

• Research on the impact of deals on the market

• Analysis of corporate culture after the merger

With the above objectives, the authors chose the topic as "Increasing common value through mergers between famous fashion brands - Applied in the deal between LVMH and Tiffany & Co." for the final report

2.1 BATNAs (Best Alternative To a Negotiated Agreement)

Negotiation is crucial in contemporary organizations, driven by the evolving nature of work relationships, the prevalence of collaborative decision-making, and the emergence of novel organizational structures As a result, researchers and practitioners emphasize identifying strategies to enhance negotiator performance (Lewicki, Saunders, & Minton, 1999).

BATNA (Best Alternative To a Negotiated Agreement) is the most advantageous alternative that a negotiating party can take if negotiations fail and an agreement cannot be made In other words, a party’s BATNA is what a party’s alternative is if negotiations are unsuccessful (Roger Fisher and William Ury, 1981) According to Fisher, Ury, and Patton, BATNA is the "only standard" that can protect you both from accepting terms that are too unfavorable and rejecting terms that it is in your interest to accept Based on the above definition, BATNA is specifically considered the best result that a participant in this negotiation can achieve when negotiations are concluded

Figure 2.1: The relationship between each party's best alternative to the negotiated agreement (seller and buyer)

Source: CFI team When negotiators have a strong BATNA, they will feel comfortable abandoning an agreement that does not meet other needs to support an agreement (Pon Staff, 2022) On the other hand, if negotiators have a weak BATNA, they should hold onto it A strong

BATNA in negotiations improves negotiators' outcomes better than the initial negotiation zone (Kim & Fragale, 2005)

Related to this report, it is easy to identify BATNA theories applied by enterprises such as LVMH and Tiffany & Co in the case of buying and selling company shares With LVMH’s BATNA, they have the ability to merge globally valued jewelry brands like Cartier With Tiffany’s BATNA, the jewelry company can accept mergers with large corporations that are competitors to LVMH such as Richemont and Labelux

BATNA is often used in negotiation tactics and should always be considered before negotiations take place It is never wise to enter a serious negotiation without knowing your BATNA The value of knowing your own BATNA deal includes providing an alternative if negotiations fail, bringing in negotiating power, and identifying your result (the worst price you're willing to accept)

BATNA not only helps negotiators avoid unnecessary negotiations, but also helps them avoid unfavorable agreements In addition, the best alternative is evaluated as an objective basis for knowing when to withdraw Without BATNA, negotiators face to face the risk of identifying stops from which to make refusals Then the participants will be able to reject an offer that is better than the intended or accept a less favorable offer as the intended purpose

2.2 ZOPA (Zone of possible agreement)

LVMH's earnings statement for 2020 - 2022

Source: LVMH Internal Report, 2022 LVMH, which owns popular fashion brands Louis Vuitton and Dior, as well as the Hennessy brand and jewelry brand Tiffany & Co., posted sales of 21.04 billion euros in the three months to March 2023 According to LVMH, sales in Asian markets (excluding Japan) increased by about 14% in Q1 2023, but decreased by 8% in Q4 2022 LVMH expects China to be the main growth motivation in 2023 LVMH's share price has risen 26.32% since the start of 2023, bringing the luxury goods group's market capitalization to 486 billion euros, double what it was three years ago If it reaches $500 billion, the luxury company will become the first European company to reach this milestone The diversification of its market portfolio, including Tiffany and Tag Heuer, is probably why LVMH is less likely to fall into a major recession

Following LVMH's acquisition, Tiffany & Co has experienced a substantial increase in global brand value Post-merger, the brand value rose from $4,966 million to $5,484 million Despite the pandemic, its value continued to surge, reaching $7,031 million in 2023, representing a 19.4% growth compared to the previous year This demonstrates LVMH's positive impact on Tiffany & Co.'s brand valuation.

Tiffany & CO.'s brand value 2020-2023

3.3 The scenario in negotiations between LVMH and Tiffany & Co

STT Scenario LVMH Tiffany & Co

1 Richemont - a competitor of LVMH proposes to acquire Tiffany & Co

2 LVMH pressures prices as Tiffany & Co faces challenges

3 LVMH and Tiffany & Co collaborate to expand the luxury jewelry market

Table 2: Scenario in negotiations between LVMH and Tiffany & Co

3.3.1 Scenario 1: Richemont - Competitor of LVMH proposes to cquire a Tiffany &

Compagnie Financiere Richemont S.A is a Swiss luxury goods company founded by South African entrepreneur Anton Rupert Richemont SA operates through its subsidiaries to design, manufacture, distribute and sell high-end jewelry, watches, leather goods, musical instruments, weapons, clothing and accessories Richemont owns a diverse portfolio of brands in the jewelry and watch sectors, including Cartier, Van Cleef & Arpels, IWC, and many others Richemont holds the second position in the global luxury goods industry after LVMH and ranks sixth in terms of overall market capitalization in Switzerland

Figure 3.3: Brands of the Richemont Group

In November 2019, LVMH proposed to acquire Tiffany & Co for $16.2 billion, causing a seismic shift in the fashion and luxury jewelry industry Soon after, realizing the brand value that Tiffany brings, Richemont quickly jumped on the acquisition offer for

$ 16.3 billion However, Richemont Group announced that it would sign a formal contract in early 2021 because Richemont Group had just completed the acquisition of the long- established Italian jewelry brand Buccellati in late September 2019, so it will no longer be able to turn around capital to buy Tiffany immediately The negotiating situation between LVMH and Tiffany could become more complicated if Richemont, another company in the fashion and jewelry industry, makes an offer to acquire Tiffany

This could lead to competition between the two large corporations, posing numerous challenges and decisions for Tiffany's leadership and shareholders The competition between LVMH and Richemont could lead to an auction, increasing the value of Tiffany While this might please Tiffany's shareholders, it also raises pressure on LVMH and Richemont to ensure they do not overpay

Tiffany recognizes that Richemont had 3 famous jewelry brands: Cartier, Van Cleef

& Arpels and Buccellati This deal may carry significant risks and may not bring much value to Tiffany Meanwhile, LVMH is a perfect choice because they are also targeting the European and Chinese markets as the strategic direction of Tiffany & Co The merger between LVMH and Tiffany could create global shared value, especially since both companies have significant influence in the world of luxury brands, their combination could form a powerful pillar in the jewelry and luxury industry

3.3.2 Scenario 2: LVMH pressures prices as Tiffany & Co faces challenges

Amidst the COVID-19 pandemic in 2020, the luxury industry faced significant challenges, and Tiffany & Co was heavily affected Its sales predominantly relying on tourists, the brand suffered from the absence of international travel due to restrictions, and store closures resulting from social distancing measures also impacted its accessibility to customers Consequently, Tiffany & Co.'s global sales plummeted by 29% in the first half of the year, leading to concerns among investors regarding the company's subdued business operations.

Realizing the situation, promptly proposed a reduced acquisition price of $15.7 billion, while also facilitating an early contract signing to enable Tiffany to address the debt LVMH was able to achieve a lower acquisition price than the original price it proposed, increasing profits for LVMH and reducing financial pressure LVMH might gain an advantageous position in negotiations and had more demands from Tiffany on the terms of the deal