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Tiffany: LVMH offers to buy



The French fashion conglomerate said Tiffany. "There is no assurance that these discussions will result in any agreement," it added.

Tiffany (TIF) confirmed Monday in a statement that it is reviewing an all-cash proposal from LVMH to buy the company for $ 120 per share. That's a premium of more than 20% over the stock's closing price on Friday.

Such a deal would value Tiffany at roughly $ 14.5 billion, but analysts believe there is a good chance that Tiffany holds out for a sweeter offer.

Oliver Chen, an analyst at Cowen, predicts that LVMH would need at least $ 160 per share to secure a deal. Other luxury companies – such as Richemont, which owns Cartier – could make competing bids, he said.

Shares of Tiffany skyrocketed more than 30% in premarket trading Monday to nearly $ 130 per share, suggesting investors. LVMH's stock barely budged in Paris.

"A takeover of Tiffany could make a lot of sense," analysts at Bernstein wrote in a research note. While it's one of the world's best-known luxury brands, analysts say it still has room to grow, particularly in jewelry and watches.

A shopper carrying a Tiffany retail bag on Fifth Avenue in New York.

Cowen's Chen pointed to the company's strong brand as a "diamond and bridal authority," as well as its growth potential in China.

The deal would booster LVMH's presence in the United States, which accounts for about a quarter of its revenue. And it would bolster the French company's jewelry and watch lineup, which includes European legacy brands such as Bulgari, Hublot and TAG Heuer. As of January, the jewelry and watch unit was brought in only 9% of the overall revenue, according to a letter to the terms.
LVMH is the world's biggest luxury group. The company is home to 75 different brands, and it According to a Deloitte analysis published this year. Last year, the retail giant took 46.8 billion euros ($ 51.9 billion) in revenue.
Tiffany has always been classy. These guys are making it cool
Tiffany has had a more complicated story. The company has long dealt with slumping sales, and in 2017 it replaced its CEO after disappointing financial results. Since then, it has been working to rebrand its image to attract more millennials.
In the company's most recent earnings report in August, global sales dropped 3% in the first half of this year. But it also said it enjoyed "strong growth" in mainland China, where the slowing economy has put pressure on the broader luxury sector.
An acquisition of Tiffany would be one of LVMH's splashiest deals to date. In 2017, the company took over Christian Dior for $ 13 billion, and last year it snapped up the ritzy Belmond hotel chain for $ 2.6 billion.

– Julia Horowitz contributed to this report.


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