Luxury conglomerate LVMH proposes $14.5 billion takeover bid for Tiffany & Co.
In a significant turn of events, luxury conglomerate LVMH has made an unsolicited $120 per share offer for Tiffany & Co. This all-cash bid, valued at approximately $14.5 billion, represents a 35% premium to Tiffany's trailing 50-day average and values the jewellery company at more than 23 times its fiscal earnings per share.
Despite the significant financial offer, Tiffany's board is yet to publicly accept the bid. The company's board is currently reviewing the proposal with assistance from Goldman Sachs and Sullivan & Cromwell. Analysts at Oppenheimer view this potential takeover as imminent, while Wells Fargo believes that Tiffany's fundamentals are somewhat challenged at present.
The investor sentiment towards Tiffany is extremely negative, with the company's first-half comps showing a decline, as noted by several analysts. However, Tiffany has made meaningful gains in sales with recent releases like "Paper Flowers" and "Tiffany HardWear". The company has also implemented store renovations and new designs to polish its brand.
Tiffany has been more transparent about the source of its diamonds, a move that could be seen as an effort to improve its image and address investor concerns. The macro headwinds from Hong Kong worsened in Tiffany's third quarter, according to analysts at Wells Fargo.
Analysts at Bernstein believe that a merger between Tiffany and LVMH is likely and will occur soon. However, a report from the Financial Times suggests that Tiffany is expected to reject the offer, as it is perceived to undervalue the company. No decision has been made by Tiffany's board regarding the offer as of the time of the report.
Recent news is likely reflecting the beginnings of a LVMH-Tiffany buyout negotiation, according to Oppenheimer analysts. The analysis group believes that a merger between the two companies is likely and will occur soon. Whether Tiffany will accept LVMH's offer remains to be seen.
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