Tiffany is accepting a $400 million discount after LVMH threatened to abandon the deal.
The move prompted a lawsuit from the U.S. jeweler to keep the deal on track.
The announcement comes after the jeweler rejected an offer last month.
Bernard Arnault, LVMH's billionaire boss, will acquire the Dior shares he doesn't already own in a vote of confidence in the luxury sector's prospects.
It was an active Monday for acquisitions, with four large deals announced, including Verizon's $4.8 billion agreement to acquire Yahoo.
