FRANCE – LVMH has offered to buy Tiffany & Co, known for its engagement rings and ties to Hollywood glamour, as the owner of Louis Vuitton and Bulgari seeks to expand in jewellery division, one of the fastest-growing parts of the luxury goods market.
LVMH revealed in October that it approached Tiffany about an unsolicited non-binding offer but declined to give further details of a deal that would beef up its smallest business and give it a slice of the lucrative U.S. market
Confirming the move, Tiffany revealed that the offer by LVMH was worth $120 per share, valuing Tiffany at nearly $14.5 billion and represents a 22% premium over the stock’s closing price on Friday.
The revelation resulted in Tiffany’s shares surging to as much as 31% to one-year highs at around $130 in New York and are on track for their best daily performance since the 182-year-old company’s market listing in 1987.
Tiffany has only said for now that it was reviewing the proposal but Reuters reported that several analysts were of the opinion Tiffany might reject the offer to seek a higher price, potentially kicking off a battle for control of the company known for its signature robin’s egg blue packaging.
LVMH said there was no guarantee that preliminary discussions would result in an agreement while analysts at Credit Suisse and Cowen said Tiffany could be worth as much as $140-$160 per share, based on the level of premium elicited by the likes of Bulgari.
Tiffany, founded in New York in 1837 and made famous by the 1961 movie “Breakfast at Tiffany’s” starring Audrey Hepburn, had struggled with falling annual sales and profit since 2015, before a revenue turnaround in 2017.
Under CEO Alessandro Bogliolo, former head of fashion firm Diesel and a Bulgari alumni, the brand has been building up its e-commerce business, and trying to court younger shoppers with more affordable pendants and earrings and new designs.
These include Paper Flowers, a floral jewellery collection made of platinum and diamonds priced between $2,500 and $75,000. Tiffany has also used celebrities like pop star Lady Gaga to front its campaigns.
If a deal emerges, it would be the biggest acquisition to date by LVMH, owned by France’s richest man, Bernard Arnault.