LVMH has its eyes on Tiffany & Co.: The world’s largest luxury conglomerate has just released a statement confirming its current discussions with the jeweller for a “possible transaction”, which involves an all-cash takeover bid for roughly US$120 per share, amounting to around US$14.5 billion (HK$113.6 billion). If the deal does go through, it would become LVMH’s biggest acquisition to date, surpassing the deal for Christian Dior in 2017 that cost US$13 billion.
Thanks to its strong brand recognition and universal appeal — even as other luxury brands are struggling with sales in recent years — the 182-year-old jeweller saw a reported record net sales of US$4.4 billion just last year, and a share increase of 22 percent this year, raising the company valuation close to US$12 billion and making it an attractive acquisition target amongst its peers.
According to Bloomberg, the growth for branded jewellery is 6% per year, which is approximately 200 basis points faster than high-end watches, meaning a successful purchase of Tiffany would make LVMH a stronger competition against Swiss rival Richemont Group, the owner of Cartier and Van Cleef & Arpels.
But that’s not all: The acquisition of the New York-based jeweller would also allow the French luxury conglomerate to expand its presence in the US market, which has become a hot topic following the recent opening of Louis Vuitton’s new factory in Texas.
At the moment, LVMH’s statement stressed that “There can be no assurance that these discussions will result in any agreement,” so we’ll just have to wait and see.