LVMH confirmed Monday its interest in the American jeweler Tiffany, famous for its engagement rings and diamonds, a potential acquisition that would be one of the largest in the history of the French luxury giant and allow it to strengthen the States United States, according to analysts
“Following recent market rumors, the LVMH group confirms that it has begun preliminary discussions about a possible operation with Tiffany,” he said in a statement, while stating that at this stage, he There was “no certainty” that these discussions resulted in an agreement.
The owner of Louis Vuitton, Dior and Champagnes Veuve Clicquot and Moet & Chandon, chaired by French billionaire Bernard Arnault, had made an offer at the beginning of the month to the jeweler, told AFP in the night from Saturday to Sunday a source close file, according to which LVMH had proposed $ 14.5 billion.
Such a buyout would be one of the largest acquisitions of the French group, present in various sectors of activity, ranging from fashion to wines and spirits through perfumes, cosmetics and selective distribution (Sephora).
At 11:00 am (10:00 GMT) on the Paris Stock Exchange, the LVMH share was stable (-0.03% to 383.85 euros). In contrast, Tiffany jumped 21.26% in the preliminary trade before the opening of Nasdaq. The market capitalization of the jeweler was close to $ 11.9 billion Friday at the close.
It is “unlikely that Tiffany shareholders will accept this initial proposal” of $ 14.5 billion, “given that it represents only a modest premium over its current valuation,” warned Michael Hewson, analyst for CMC Markets.
– Boost growth in the United States –
This transaction, if it took shape, would allow LVMH to “complete a portfolio of unique brands”, by strengthening its presence in jewelery, commented Invest Securities analysts.
In this sector, according to them, “LVMH, already owner of the brand Bulgari, which it has beautifully recovered and relaunched since its acquisition in 2011, would titillate the leadership of the group Richemont”, owner of Cartier and Van Cleef & Arpels.
It could also boost the growth of the French giant in the United States, its second largest market after Asia, and at the same time limit the negative effects of trade tensions that threaten the demand for luxury goods in China.
“It's all about the importance that the LVMH Group continues to attribute to the US market which remains intrinsically the first global outlet for luxury,” added Invest Securities analysts.
Tiffany, whose flagship adjoins the Trump Tower on Fifth Avenue in New York, has not yet officially responded to LVMH's proposal.
The announcement of talks between the two companies comes on the background of inauguration in mid-October of a Louis Vuitton plant in Texas (south), by Mr. Arnault, accompanied by US President Donald Trump and his daughter Ivanka.
– “Modest premium” –
Tiffany recorded a 6.5% increase in sales in the last fiscal year, up 6.5%, but growth is being held back by the strong dollar and lower spending by tourists in the United States .
LVMH could “singularly” improve “the profile of profitability and growth” of the jeweler, which “relatively disappointed over the recent period, with very uneven and contrasting performance depending on geographical areas and periods and average operating profitability compared to the image and potential of the brand, “said Invest Securities analysts.
Founded in 1837 by Charles Lewis Tiffany, the New York jeweler had opened his first boutique in southern Manhattan. It went public in May 1987, nearly 150 years after its creation.