LVMH makes bid for US jeweller Tiffany
THE LVMH-TIFFANY DEAL COULD POTENTIALLY BE AMONG THE LARGEST DEALS BY A EUROPEAN COMPANY IN 2019 AND ARNAULT’S BIGGEST EVER TAKEOVER
NEW YORK/LONDON/PARIS: LVMH said it has held discussions with jeweller Tiffany & Co. on a deal that would expand the Louis Vuitton owner’s reach into the luxury business and could be chairman Bernard Arnault’s biggest ever takeover.
The French luxury conglomerate confirmed the talks after Bloomberg reported earlier that LVMH has offered about $14.5 billion, or $120 a share, which would be 22% more than the October 25 closing price. Tiffany shares surged to $117.50 in US premarket trading.
There’s no assurance that the discussions, described as preliminary, will result in any agreement, LVMH said in a statement on Monday.
A deal for the jeweller would expand the French company’s access to US luxury shoppers, giving it an iconic, 182-year-old brand known for its robin’s egg blue boxes and its role as a favourite haunt of Holly Golightly in Truman Capote’s Breakfast at Tiffany’s. Adding the brand to a stable that includes the Bulgari jewel and watch label, Christian Dior fashions, Hublot watches and Dom Perignon Champagne could help LVMH compete against Cartier owner Richemont SA.
Jewellery is one of few segments of the luxury sector where LVMH is not the leader, “and we know Mr Arnault likes to be always No. 1,” RBC analyst Rogerio Fujimori said in a note. “Tiffany would become a better company and stronger competiler tor under the ownership LVMH.”
Tiffany is expected to reject the offer as undervalued, the Financial Times reported, citing people familiar with the matter. A representative for the jeweller declined to comment.
Tiffany shares closed at $98.55 on Friday for a market value of $11.9 billion, though that’s well short of their peak of $139.50 in July 2018.
A fair valuation of the jewelof would be about $160 a share or higher, according to Cowen & Co. analyst Oliver Chen. He wrote in a note on Sunday that Tiffany’s “strategic positioning as a gifting authority, brand DNA as a diamond and bridal authority, are leading qualities and deserve an exceptional premium.”
Paris-based LVMH rose about 1% early on Monday. It has jumped about 50% this year, giving it a market capitalisation of more than $215 billion.
A takeover of Tiffany would be bigger than the $7 billion LVMH paid for the rest of Christian Dior in 2017. For 70-yearold Arnault, it would be his first major transaction since the purchase of luxury hotel chain Belmond last year, and potentially among the largest deals by a European company in 2019.