Tiffany expected to reject LVMH’s $14.5bn bid
Unsolicited approach is a premium of about 22% to US jeweller’s share price
Tiffany is expected to rebuff an unsolicited $14.5bn takeover approach from French luxury group LVMH, with the US jeweller believing the offer undervalues the company, according to people familiar with the matter.
Tiffany’s advisers were on Sunday still assessing the surprise indicative offer from Bernard Arnault’s LVMH, the world’s largest luxury group by sales, with the board set to consider the next move.
The all-cash offer came earlier this month and was pitched at about $120 per Tiffany share, a premium of about 30 per cent to Tiffany’s share price at the time.
However, the shares have since rallied and the offer today stands at a slimmer 22 per cent premium. It is also well below their closing high of $139.50 in July 2018.
Tiffany has since been hit by challenges including lower tourist spending, a strong US dollar and a trade war between the US and China.
Egerton Capital, a hedge fund that is the sixth-biggest shareholder in Tiffany with a 3.9 per cent stake, welcomed the approach.
“LVMH is the best luxury goods company in the world and has had huge success with Bulgari,” John Armitage, chief investment officer of London-based Egerton, told the Financial Times. “As Tiffany shareholders, we would like the value of a great brand and company maximised.”
Other large shareholders in Tiffany include Qatar Holding, an arm of the country’s sovereign wealth fund.
Over the past four decades Mr Arnault, Europe’s richest person, has built LVMH from a near-bankrupt French textile company to the world’s largest luxury group by revenues. Its brands include Dior, Louis Vuitton and Sephora.
A tie-up between LVMH and Tiffany would mark one of the French group’s largest acquisitions and strengthen its position in jewellery, adding to its $5.2bn purchase of Italian jeweller Bulgari in 2011.
The acquisition of Tiffany would give LVMH scale in hard luxury to rival that of Johann Rupert’s Richemont, which owns Cartier and Van Cleef and is the market leader in this part of the industry. Analysts say that Tiffany has scope to expand into watches, and it would increase LVMH’s client base in the core US market while opening up opportunities with customers who are unable to afford its more expensive Bulgari brand.
Under chief executive Alessandro Bogliolo, a former executive at Bulgari, Tiffany has attempted to push further upmarket.
LVMH and Tiffany declined to comment.