AF: You predict that very few companies will remain independent, with the possible exceptions of Hermes International, Chanel and Rolex. How could this play out?
ER: Once we get out of this crisis meaningfully, I think we will see a new era of frenzy in M&A. There are very few forced sellers. It’s more about the realization from many families that scale matters. If you are on your own, it is way more difficult to emerge from a crowd. I think families will be merging or selling their assets, not because they have to, but because they understand it is probably the better solution for their name to still be around in 30 years’ time.
AF: So the million-dollar question: Will LVMH end up buying Tiffany?
ER: Whatever happens, developing jewelry makes sense for LVMH. They have explained they are not going ahead with the deal because of a six-week delay. Yet LVMH is incentivized to take a 30-year view. Either they are looking to get a better price, or there are bigger things that we are not aware of, possibly a tie-up with Richemont. People are talking about them switching brides. But there are a whole bunch of intricacies. The story is not over. We will hear about this for months ahead.
This article was provided by Bloomberg News.