- Louis Vuitton offered $14.5 billion to Jeweler Tiffany & Co. in a bid that could lead to the largest ever acquisition of Chairman Bernard Arnault and extend the scope of the Louis Vuitton founder to the US.
- The jeweler urged investors not to take action, saying that the bid is being reviewed by its management. The cost would be 22% lower than the closing of Oct. 25. Tiffany shares rose early Monday to $128.30.
LVMH offered $14.5 billion to Jeweler Tiffany & Co. in a bid that could lead to the largest ever acquisition of Chairman Bernard Arnault and extend the scope of the Louis Vuitton founder to the US.
Tiffany said it received the luxury giant’s unsolicited $120-a-share offer after a Bloomberg story was reported by the French company that it was considering a bid.
The jeweler urged investors not to take action, saying that the bid is being reviewed by its management. The cost would be 22% lower than the closing of Oct. 25. Tiffany shares rose early Monday to $128.30.
There is no guarantee that initial negotiations will lead to an agreement, LVMH said in a statement, while Tiffany said there are no talks going on.
A deal for the jeweler will broaden the French company’s exposure to US luxury customers, giving it an iconic 182-year-old brand famous for its robin egg blue boxes and its appearance as Holly Golightly’s favorite haunt in Truman Capote’s “Tiffany’s Breakfast.” Adding the brand to a stable that includes the Bulgari jewel and watches label, Christian Dior fashions, Hublot watches and Dom Perignon Ch watches.
Jewelry is one of a few luxury industry markets where LVMH is not the leader, “and we know that Mr. Arnault still wants to be No. 1,” RBC analyst Rogerio Fujimori said in a statement.
“Tiffany will become a better company and a stronger rival owned by LVMH.” Even after the 30 percent increase on Monday, Tiffany’s shares are well below its $139.50 high in July 2018.
According to Cowen & Co. analyst Oliver Chen, a fair value of the jeweler would be around $160 a share or higher.
He wrote in a note on Sunday that Tiffany’s “strategic positioning as a gifting authority, product DNA as a diamond and bridal authority, are leading qualities and deserve an outstanding premium.” In early afternoon trading, LVMH based in Paris has changed nothing. It has jumped around 50% this year, giving it a market capitalization of about $215 billion.
The French company has been riding a wave of luxury demand in China but faces threats including the trade war with the US in that country and the months-long demonstrations against Beijing in Hong Kong. It opened a new Louis Vuitton factory in Texas earlier this month in a ceremony that included President Donald Trump as the French company sharpens its attention to the U.S., its second-largest market from Asian sales.
LVMH is not as influential in jewelry as it is in clothing. Adding Tiffany will broaden the potential market of the French giant by providing something more available.
Unlike more rarefied offers from Bulgari, such as € 2 million ($2.2 million) wristwatch, Tiffany is better known for engagement rings that could cost a few months ‘ pays.
According to the Bloomberg Billionaires List, Arnault is already the richest man in Europe with a fortune of $96.5 billion. A deal for Tiffany would keep him in the race to consolidate the luxury industry ahead of Richemont’s Johann Rupert and Gucci owner Kering’s Pinault family. LVMH dwarfs Tiffany, which has only $4.4 billion, with revenue of more than $50 billion.
If an agreement is reached, a French acquirer’s new attempt to tap US development would be marked. Dassault Systemes SE, a French technology company, agreed in June to purchase $5.7 billion from Medidata Solutions Inc., a software firm analyzing clinical trials. And last year, Axa SA bought $15.3 billion from XL Group Ltd. to grab a larger slice of the U.S. property and casualty market.