French luxury giant LVMH has been planning to buy iconic American jeweler Tiffany & Co., reports the Wall Street Journal.
Bernard Arnault’s group is said to have offered a buyout at a price of $120 per share. On Tuesday night, shares were estimated at $126 each, down almost 3%.
Confirmed by Reuters, the price of the acquisition is estimated at $14.5 billion.
As this transaction might confirm the strong takeover of the French group among the luxury industry, it also shows that the American economy has sharply weakened because of the tariffs on its exports in China and four-month long protests in Hong Kong.
A $14.5 billion acquisition offer
Tiffany & Co, the iconic luxury store from Manhattan’s fifth avenue might undergo its biggest change ever. Founded in 1837, Tiffany & Co is the biggest jeweler in the United States and one of the symbols of American luxury.
Last week, LVMH offered Tiffany & Co a “non-binding” offer, reports Bloomberg, who confirmed the information on Saturday, October 26th.
— Reuters (@Reuters) October 26, 2019
As for now, no amount has been confirmed by either of them, but media have reportedly said that the transaction is estimated at $14.5 billion. This could become the biggest acquisition for the French group since 1987.
Last but not least, Bernard Arnault’s group has offered to buy 100% of Tiffany & Co’s capital at a price of $120 per share. This represents 30% more than the current price per share.
According to Le Monde, several analysts in the US firm Bernstein have emphasized the “relevance” of the buyout.
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LVMH plans to expand in the US
It is no coincidence if this announcement came only a few days after the inauguration of a Louis Vuitton site in South Texas, in the presence of Bernard Arnault, President of the United States Donald Trump and his daughter Ivanka.
As a matter of fact, LVMH continues to affirm its development strategy in the United States. Tiffany & Co might be the biggest asset in the United States for the group.
With a turnover of $4.4 million in 2018 and with a rise in sales to 6.5%, the jeweler had a bad year in 2019, as the political crisis in Hong Kong affected the sales (HK being the brand’s biggest sales hub), as well as the US-China trade war.
While the two companies have not yet begun formal discussions, LVMH’s strategic transaction could only reaffirms its international development strategy. In 2011, the French giant bought Bulgari for $5.2 billion.