Luxury group LVMH Moët Hennessy-Louis Vuitton has agreed to acquire American luxury jewellery and specialty retailer Tiffany & Co for $16.2bn or $135 per share in cash.

LVMH said it believes that the acquisition will boost its presence in the US and complement its 75 distinguished Houses.

Approved by the boards of directors of both companies, the deal is expected to close in the middle of next year, with Tiffany & Co added to LVMH’s Watches & Jewellery division.

Last month, Tiffany & Co confirmed the receipt of an unsolicited, non-binding proposal from LVMH.  The proposal offered to acquire Tiffany for $120 per share in cash.

At the time, the retailer had revealed that the two parties were not in discussions. However, the retailer admitted that through its independent financial and legal advisors, it was carefully studying the proposal.

The transaction is dependent on customary closing conditions, approvals from Tiffany’s shareholders and regulatory.

Tiffany & Co board of directors chair Roger Farah said: “Following a strategic review that included a thoughtful internal process and expert external advice, the board has concluded that this transaction with LVMH provides an exciting path forward with a group that appreciates and will invest in Tiffany’s unique assets and strong human capital, while delivering a compelling price with value certainty to our shareholders.”

Citi and JP Morgan are serving as financial advisors and Skadden, Arps, Slate, and Meagher & Flom as legal counsel to LVMH.

Centerview Partners and Goldman Sachs are acting as financial advisors and Sullivan & Cromwell as legal counsel to Tiffany.

Since 2015, Tiffany & Co has reported a fall in its annual sales and profit.