Following much speculation, Tiffany & Co (US:TIF) has confirmed receipt of an unsolicited all-cash takeover offer from luxury conglomerate LVMH (FR:MC.) At $120 per share, the bid represents a 22 per cent premium to the US jeweller’s closing price the day before it was announced and values the group at $14.5bn.
Rogerio Fujimori, equity analyst at RBC Capital Markets, believes Tiffany would become “a better company and stronger competitor under the ownership of LVMH”. He points to the 2011 acquisition of Bulgari as demonstrative of LVMH’s ability to accelerate brands’ top line growth while maintaining their distinct identity. As well as achieving synergies in distribution and purchasing, Tiffany should get support from LVMH’s digital strategy which could open up opportunities, especially in China.
For LVMH, the acquisition would strengthen its existing ‘hard luxury’ portfolio – jewels and watches – with Tiffany’s more affordable product range attracting a broader customer base. With more than two-fifths of Tiffany’s sales derived from the Americas, LVMH would increase its exposure to the US market. In 2018, only 9 per cent of LVMH’s watches and jewellery revenue came from the US compared to 32 per cent for the overall group.
