After Bulgari And Dior, Arnault Wants to Add Jeweller Tiffany to the LVMH Luxury Crown

This is the big one for Europe’s richest man and acquisitive owner of luxury conglomerate LVMH Moët Hennessy Louis Vuitton.

Tiffany & Co., the iconic US jeweler that featured in the Audrey Hepburn starrer Breakfast at Tiffany’s, has received a takeover offer from LVMH.

LVMH is the owner of the Louis Vuitton brand and the world’s largest luxury goods group. It reportedly made an all-cash offer of $120 per share of Tiffany, valuing the jeweler at $14.5 billion.

LVMH’s Tiffany bid is generous but may end up higher

The offer is at a 30% premium to the value of a Tiffany share at the time of the offer. Tiffany shares closed Friday at $98.55, translating into a market capitalization of about $12 billion.

“If a bid at this level, or indeed higher, were confirmed, it would be the largest M&A transaction to date for LVMH but one it could comfortably afford,” commented analysts at Jefferies.

People familiar with the matter said LVMH could up its offer to ensure it clinched the deal, the WSJ said.

Deep-pocketed LVMH

Bernard Arnault, Europe’s richest man and known for his acquisitive nature, owns LVMH. With $50 billion in annual sales, LVMH owns luxury brands such as Louis Vuitton and Dom Perignon. Arnault paid about $13 billion in 2017 to acquire full ownership of Christian Dior.

In 2011, cash-rich LVMH paid $5.2 billion to acquire the Italian luxury group Bulgari. Interestingly, that deal was clinched over the weekend – from approach to acceptance.

“LVMH has ample financial capacity for a deal, and we also expect many strategic and financial synergies,” said analysts at Cowen.

LVMH eyeing storied Tiffany

While the Tiffany transaction may not proceed so quickly, or at all, the jeweler has already hired advisers to review the offer.

Tiffany was founded in 1837 and is one of the top global picks in the sector. It is legendary for its diamond engagement rings and robin’s egg blue gift boxes.

Negative interest rates make cash unappealing

The negative interest rate regime in Europe is likely to remain in place for some time. Therefore, companies with strong balance sheets are likely to route their extra cash into strategic acquisitions.

It has become “expensive to sit on excess liquidity,” Andreas von Buchwald, the chief executive officer of Nordic Knowledge Partners, says.

He was commenting on data that showed deal-making in Scandinavia in July 2019 rose by a third from a year ago.

[Related Story: Credit Suisse Will Charge Large Depositors for Cash Deposits  ]

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