LVMH has offered $14.5 billion for jeweler Tiffany & Co. in a bid that could result in Chairman Bernard Arnault’s biggest ever takeover and expand the Louis Vuitton owner’s reach into the U.S.
Tiffany said it received an unsolicited $120-a-share proposal from the luxury giant, after the French company confirmed a Bloomberg report that it was considering a bid.
The jeweler advised shareholders to take no action, saying its board is reviewing the offer. The price would be 22% more than the Oct. 25 close. Tiffany shares surged to $128.30 early Monday.
There’s no assurance that preliminary talks will result in an agreement, LVMH said in a statement, while Tiffany said no discussions are under way.
A deal for the jeweler would expand the French company’s access to U.S. luxury shoppers, giving it an iconic, 182-year-old brand known for its robin’s egg blue boxes and its role as a favorite 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.
Jewelry 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 competitor under the ownership of LVMH.”
Even after Monday’s 30% surge, Tiffany shares are well short of their peak of $139.50 in July 2018.
‘Stronger Competitor’
A fair valuation of the jeweler would be about $160 a share or higher, according to Cowen & Co. analyst Oliver Chen. He wrote in a note 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 was little changed in early afternoon trading. It has jumped about 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 risks including that country’s trade war with the U.S. and the months-long anti-Beijing protests in Hong Kong. Earlier this month, it opened a new Louis Vuitton factory in Texas in a ceremony that included President Donald Trump as the French company sharpens its focus on the U.S., its second-largest region by revenue behind Asia.