LVMH May Be a Logical Buyer of Burberry, Tiffany, MainFirst Says
2015-06-17 09:56:10.429 GMT
By Heather Burke
(Bloomberg) -- LVMH rated new outperform at MainFirst; says
in note co.’s size/scale, geographic and category diversity,
structure offer opportunities; EU185 PT implies ~15% upside from
yday close.
* Co. has focused on sales, mkt shr growth over returns for
>10 yrs; focus may be moving towards more balance where
extra cash from “1,000lb brand gorilla” Louis Vuitton used
to back growth of smaller brands; LV to generate ~75% of
co.’s FCF in 2015
* LVMH, Richemont only logical “trade” acquirers strong
enough to make >EU10b bids for Burberry and Tiffany, the 2
“elephants” in luxury/branded goods sector
*
* Both deals would be accretive assuming calendarized
2016E EV/EBITDA 15.0x acquisition multiples
* Future cash could lead to EU2.5b buyback if no big M&A
* Focusing on smaller brands would help positive oper.
leverage, luxury mkt shr
* Future brand IPOs such as Marc Jacob could offer shrholder
returns in medium to long term; Marc Jacobs part IPO (49%)
could net stakeholders and LVMH shareholders over >$1b
* Moet Hennessy undervalued, has some of most prestigious
brands
*
* Values LVMH’s 66% stake at ~EU16b or EU32/shr or ~EU19b
or EU37/shr on merger basis
* Diageo still very interested in Moet Hennessy brands,
Hennessy cognac; outright disposal by LVMH doesn’t make
sense
* Only viable deal that can see would be a merger for the
whole or part of Moet Hennessy with Diageo
For Related News and Information:
First Word scrolling panel: FIRST<GO>
First Word newswire: NH BFW<GO>
To contact the reporter on this story:
Heather Burke in London at +44-20-3525-2044 or
hburke2@bloomberg.net
To contact the editor responsible for this story:
James Ludden at +44-20-3525-2645 or
jludden@bloomberg.net
2015-06-17 09:56:10.429 GMT
By Heather Burke
(Bloomberg) -- LVMH rated new outperform at MainFirst; says
in note co.’s size/scale, geographic and category diversity,
structure offer opportunities; EU185 PT implies ~15% upside from
yday close.
* Co. has focused on sales, mkt shr growth over returns for
>10 yrs; focus may be moving towards more balance where
extra cash from “1,000lb brand gorilla” Louis Vuitton used
to back growth of smaller brands; LV to generate ~75% of
co.’s FCF in 2015
* LVMH, Richemont only logical “trade” acquirers strong
enough to make >EU10b bids for Burberry and Tiffany, the 2
“elephants” in luxury/branded goods sector
*
* Both deals would be accretive assuming calendarized
2016E EV/EBITDA 15.0x acquisition multiples
* Future cash could lead to EU2.5b buyback if no big M&A
* Focusing on smaller brands would help positive oper.
leverage, luxury mkt shr
* Future brand IPOs such as Marc Jacob could offer shrholder
returns in medium to long term; Marc Jacobs part IPO (49%)
could net stakeholders and LVMH shareholders over >$1b
* Moet Hennessy undervalued, has some of most prestigious
brands
*
* Values LVMH’s 66% stake at ~EU16b or EU32/shr or ~EU19b
or EU37/shr on merger basis
* Diageo still very interested in Moet Hennessy brands,
Hennessy cognac; outright disposal by LVMH doesn’t make
sense
* Only viable deal that can see would be a merger for the
whole or part of Moet Hennessy with Diageo
For Related News and Information:
First Word scrolling panel: FIRST<GO>
First Word newswire: NH BFW<GO>
To contact the reporter on this story:
Heather Burke in London at +44-20-3525-2044 or
hburke2@bloomberg.net
To contact the editor responsible for this story:
James Ludden at +44-20-3525-2645 or
jludden@bloomberg.net