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Tiffany shares jump as Louis Vuitton owner LVMH confirms takeover discussions

Tiffany has hired advisers to review the offer but has not yet responded to it and it is not clear whether it will consider a deal, according to Reuters

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Weekend media reports said LVMH had made a takeover approach that valued the US jeweller at US$14.5bn

Tiffany & Co. (NYSE:TIF) shares jumped higher in pre-market US trade after French luxury group LVMH confirmed it is in discussions over a potential takeover of the US jeweller.

LVMH, the owner of upscale brands such as Louis Vuitton, Fendi, Christian Dior and Givenchy, said in a brief statement on Monday that it held "preliminary talks" to acquire the New York-based firm, adding there is no assurance they will end in any agreement.

The statement came in response to weekend media reports which said LVMH had made a takeover approach that valued the US jeweller at US$14.5bn, or about US$120 per share. Reuters said Tiffany had reportedly hired advisers to review the offer but has not yet responded to it and it is not clear whether it will consider a deal.

Tiffany's shares were up 20% to US$118 in pre-market New York trading on Monday. The company - shares in which closed trade on Friday at US$98.55 each - has been hit by the US-China trade war which has seen double-digit plunges in its sales to Chinese tourists after Beijing imposed a lower domestic sales tax.

In an initial reaction to the bid approach chatter, analysts at Deutsche Bank upgraded their rating for Tiffany to 'buy' from 'hold' and raised their target price to US$130 from US$100, saying they considered the approach "credible" on the back of Tiffany's strong brand equity, its potential relaunch and the involvement of a third party.

The German bank's analysts said the luxury jewellery market has "significant scope" for consolidation, due to the reduced competition, and the acquisition of one of the leaders could be a "shortcut" for LVMH, which is already well-versed in the sector as it owns Bulgari, one of the world's top five brands.

LVMH, which has been looking to expand to the US for years, is one of the top performers in its sector, with a market capitalisation of €194bn and a portfolio of luxury brands in high demand among Asian customers.

The news sparked upticks in Tiffany's peers, notably London-listed Burberry Group plc (LON:BRBY), up 0.25% to 2,027p.

 -- Adds LVMH statement, broker upgrade, share price --

Quick facts: Tiffany & Co.

Price: 127.54 USD

NYSE:TIF
Market: NYSE
Market Cap: $15.48 billion
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