LVMH makes takeover bid for Tiffany & Co.

Marianne Wilson
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Tiffany storefront

A French luxury goods conglomerate is looking to add a U.S. crown jewel to its portfolio.

LVMH Moet Hennessy Louis Vitton has made a bid for Tiffany & Co. The U.S. high-end jeweler confirmed Monday that it received an unsolicited, non-binding proposal from LMVH for $120 per share in cash. The offer would value Tiffany at nearly $14.5 billion and represents a 22% premium over the stock’s closing price on Friday.

Tiffany issued a statement in which in noted that while the parties “are not in discussions,” it is reviewing the proposal as is “consistent with its fiduciary responsibilities.” Tiffany also said its shareholders need not take any action at this time. LVMH also issued a statement and said there was no guarantee that preliminary discussions would result in an agreement.

Several analysts said that Tiffany might reject the offer in hopes of a higher price tag. Credit Suisse analysts believe that Tiffany deserves “an exceptional premium” of $160 per share, reported CNBC. Forrester VP and analyst Suchaita Kodali noted ongoing retail consolidation and that Tiffany has had a number of ups and down in recent years.

“It comforts me if LVMH could be the buyer,” Kodali said. “That would be the scenario that preserves the brand equity most and would be a better outcome for the long term equity of the brand than a private equity buyer.”

The bid comes as the 182-year-old Tiffany, which has more than 300 stores around the world, is challenged with lackluster sales amid a slowdown in tourism and a dip in purchases by Chinese customers. 

Alessandro Bogliolo, who took the reins as CEO in 2017, has worked to update the brand’s image and make it more appearling to younger shoppers. Bogliolo has also focused on building sales in China.

LVMH is the world's biggest luxury group, and home to 75 different brands. Its portfolio includes fashion brands such as Louis Vuitton, Christian Dior, Givenchy, Fendi and Marc Jacob and more. Its jewelry brands include Bulgari, Fred Hublot and Tag Heuer. In 2018, it acquired  the luxury Belmond hotel chain for $2.6 billion. LVMH’s market capitalization was nearly $214 billion as of Friday, according to the New York Times