French luxury goods giant LVMH (LVMH, which is run by billionaire CEO Bernard Arnault and owns brands such as Louis Vuitton and Christian Dior, confirmed its interest on Monday following media reports of an offer over the weekend. The French fashion conglomerate said it held “preliminary discussions” regarding a “possible transaction” with Tiffany. “There can be no assurance that these discussions will result in any agreement,” it added. Tiffany () 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.) has offered to buy Tiffany & Co., the iconic New York jeweler known for its little blue boxes.
Such a deal would value Tiffany at roughly $14.5 billion, but analysts believe there’s a good chance that Tiffany holds out for a sweeter offer. Oliver Chen, an analyst at Cowen, predicts that LVMH would need to propose 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 also expect a more lucrative offer. 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.
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 wouldboostLVMH’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 only brought in 9% of overall revenue, according to a letter to shareholders. LVMH is the world’s biggest luxury group. The company is home to 75 different brands,and ithas for years been the top seller of high-end goods, according to a Deloitte analysis published this year. Last year, the retail giant took in 46.8 billion euros ($51.9 billion) in revenue.