Louis Vuitton Looks To Acquire Tiffany & Co. For $14.5 Billion

LVMH, the world's biggest luxury group, said on Monday it had approached Tiffany & Co about a possible takeover of the USA jeweller.

A story in the Financial Times yesterday said that LVMH has made a $14.5 billion offer to purchase the retailer.

Tiffany's was founded in 1837 by CT jeweler Charles Lewis Tiffany and the brand name became world famous in the early 20th century under the artistic direction of his son Louis Comfort Tiffany.

LVMH operates a raft of brands, including Moet & Chandon, Christian Dior, Louis Vuitton and Bulgari. It racked up revenue of about 47 billion euros, or about 52 billion dollars in 2018. It would also give LVMH a much broader foothold in the United States and widen its offerings in jewelry.

Tiffany shares jumped almost 30% or $28.81, to $127.37 in early Monday trading, although LVMH cautioned in a brief statement that "there can be no assurance that these discussions will result in any agreement".

Tiffany, founded in 1837 and a storied name in jewellery, is one of the sector's top prizes.

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LVMH already owns jewelers Fred and Bulgari, which it purchased in 2011. The strong U.S. dollar has also made Tiffany products more expensive for overseas consumers.

"We believe Tiffany has many characteristics that are hard to replicate and represent competitive advantages", wrote Oliver Chen, luxury analyst at Cowen & Co., an investment research firm. The company's sales to Chinese tourists fell by more than 25 percent, Tiffany's chief executive officer, Alessandro Bogliolo, said in June.

High-end brands have also long relied on Hong Kong as a major shopping hub drawing visitors from mainland China in particular, and four months of pro-democracy demonstrations are starting to take their toll.

In jewelry, LVMH is not as strong as in fashion.

LVMH is looking to sharpen its focus on the USA, the company's second-largest region by revenue behind Asia.

Hewson added, however, that Tiffany shareholders were "unlikely to accept this initial bid" and could hold out for more. A deal for Tiffany would keep him ahead of Richemont's Johann Rupert and Gucci owner Kering's Pinault family in the race to consolidate the luxury industry. Unlike Bulgari's more-rarefied offerings, such as 2 million euro (US$2.2 million) wristwatch, Tiffany is better known for engagement rings that might cost a couple months' pay. With sales of more than $50 billion, LVMH dwarfs Tiffany, which has about $4.4 billion.

  • Darren Santiago