Louis Vuitton owner eyes jewelry icon Tiffany & Co
French luxury goods giant LVMH is eyeing a takeover of Tiffany & Co., the iconic New York jeweler known for its little blue boxes.
LVMH, which is run by billionaire CEO Bernard Arnault and owns brands such as Louis Vuitton and Christian Dior, confirmed its interest on Monday after several media outlets reported over the weekend that it had made a takeover offer for Tiffany.
The French fashion conglomerate acknowledged only that it held “preliminary discussions” regarding a “possible transaction” with Tiffany, adding that “there can be no assurance that these discussions will result in any agreement.”
Bloomberg and others have reported that LVMH approached the jeweler with an all-cash proposal earlier this month that would value Tiffany at about $14.5 billion, or $120 a share. That’s roughly 20% more than the stock’s closing price Friday.
Tiffany has brought on advisers to review the offer and so far hasn’t responded to LVMH, according to Reuters, which cited anonymous sources familiar with the matter.
Shares of Tiffany skyrocketed nearly 20% in premarket trading Monday, while LVMH stock was up 0.4% in Paris. Tiffany did not immediately respond to a request for comment from CNN Business.
“A takeover of Tiffany could make a lot of sense,” analysts at Bernstein wrote in a research note. While Tiffany is one of the world’s best-known luxury brands, the analysts said it still has room to grow, particularly in jewelry and watches.
The deal would boost LVMH’s presence in the United States, which accounts for about a quarter of its revenue. It would also bolster the French company’s jewelry and wristwatch lineup, which include European legacy brands such as Bulgari, Hublot and TAG Heuer. As of January, the jewelry and watch unit only brought in 9% of overall revenue, according to a letter to shareholders.
LVMH is the world’s biggest luxury group. The company is home to 75 different brands, and it has for years been the top seller of high-end goods, according to a Deloitte analysis published this year. Last year, the retail giant took in 46.8 billion euros ($51.9 billion) in revenue.
Tiffany has had a more complicated story. The company has long dealt with slumping sales, and in 2017 it replaced its CEO after disappointing financial results. Since then, it has been working to rebrand its image to attract more millennials — adding more products that are designed to appeal to young shoppers, rolling out more targeted marketing and revamping its historic flagship store in New York City to draw in more customers.
In the company’s most recent earnings report in August, it said that global sales dropped 3% in the first half of this year. But it also said it enjoyed “strong growth” in mainland China, where the slowing economy has put pressure on the broader luxury sector.
The company’s “long-term growth potential in China” is one of the main factors that makes it attractive to buyers, analysts at Cowen wrote in a note on Sunday.
An acquisition of Tiffany would be one of LVMH’s splashiest deals to date. In 2017, the company took over Christian Dior for $13 billion, and last year it snapped up the ritzy Belmond hotel chain for $2.6 billion.