LVMH (LVMUY  ), or the world's largest group for luxury consumer goods, made headlines this week for adding another brand to their long list of affiliates. The French luxury group announced Monday that they will buy Manhattan jeweler Tiffany & Co (TIF  ). LVMH agreed to pay $135 per share of Tiffany's stock, a move that values Tiffany at about $16.2 billion. This deal is one of the largest in the history of the luxury sector, making current CEO of LVMH Bernard Arnault Europe's richest man.

Tiffany is a 182 year old jeweler that employs 14,000 people and operates 300 stores around the globe. Tiffany has made its brand synonymous with engagement rings and diamond jewelry. The brand has recently aimed to attract younger consumers with influencer advertisements, store remodels and the flagship store's Blue Box Cafe in New York. However, Tiffany over the past few years has been criticized for lacking innovation and has been slumping in U.S. millennial markets. Tiffany was a strong acquisition target for the luxury group because the jewelry company has a strong global demand, especially in Chinese markets where consumers are showing a stronger demand for fine jewelry and diamonds. The deal is forecasted to strengthen LVMH's jewelry and watch line, which already includes brands such as Hubloy and Tag Heuer.

As a company, LVMH has its hand in a variety of luxury consumer goods like wine, spirits, fashion, leather goods, perfumes, cosmetics, watches, jewelry, retail, and other extravagant brands like hotels and yachts. The company's notable brands include Moët Hennessy, Christian Dior, Bulgari, Fenty, Louis Vuitton, Marc Jacobs, Sephora, and over 60 other affiliates. The company first formed in a 1987 merger of the fashion brand Louis Vuitton with Moët Hennessy.

LVMH has been building a history of restoring and building luxury brands. Based on how Arnault has handled past brand acquisitions, the company is expected to build Tiffany's business in markets outside of the Americas. Nearly half of Tiffany's sales come from Asia, making LVMH's buy bet on China's economy and consumers where Tiffany is "building flagship stores in several Chinese cities." LVMH is famous for launching designs that can immediately be identified with their brand, like the "LV" logo on Louis Vuitton goods, so the company is also expected to expand Tiffany's "T" designs and introduce more products that carry recognizable emblems of the brand. LVMH's plans for Tiffany have three main objectives: increasing the brand's value, improving its retail network and expanding its product offerings.

As a stock, share prices have nearly doubled over the past few years as demand for the various luxury products have risen in both developed and emerging markets. LVMH has experienced success by building the air of luxury. Prices of brands under the luxury groups umbrella remain the same in various market climates and the core brands only face a handful of competitors in the high-end market. High-end markets also are less affected by market volatility and economic recessions when compared to more value branded consumer goods. LVMH, being based in Paris, also it is not completely affected by the tariff war between the U.S. and China, though some of its subsidiaries have ties to the United States. This means that the company has a chance to focus on its image rather than trade affecting its bottom line. LVMH's brands have enjoyed more success with younger consumers by attracting influencers and major fashion brands. It seems that this buy will boost both Tiffany and LVMH by the luxury groups continued effort to define luxury products.

The deal is set to close in 2020.