LVMH wants to tie knot with Tiffany
PARIS LVMH has offered to buy Tiffany & Co, known for its engagement rings, as the owner of Louis Vuitton and Bulgari seeks to expand in jewelry, one of the fastest-growing parts of the luxury goods market.
In a deal that would beef up its smallest business and give it a slice of the lucrative U.S. market, LVMH on Monday said it had approached Tiffany about an unsolicited non-binding offer, but gave no details.
Confirming the move, Tiffany said the offer was worth US$120 per share, which would value Tiffany at nearly US$14.5 billion and represents a 22 per cent premium over the stock’s Friday closing price.
Investors piled into the New York-listed stock on the news, sending Tiffany shares up as much as 31 per cent to one-year highs around US$130 and putting them on track for their best daily performance since the 182-year-old company’s market listing in 1987.
Several analysts said Tiffany might reject the offer to seek a higher price, potentially kicking off a battle for control of the company. Bloomberg reported that Tiffany may attract rival bids.
“An approach is credible, given the appeal of the sector,” said Deutsche Bank’s Francesca Di Pasquantonio. “Tiffany management and board are likely to have a high bar in regards to any approach due to the company’s strong brand equity, the argument that earnings and margins are currently depressed, and the potential for a third party to get involved.”
LVMH said there was no guarantee that preliminary discussions would result in an agreement.
Tiffany said it was still reviewing the proposal and is “not in discussions” with LVMH about a deal.