France's LVMH seeks to buy jeweler Tiffany for $14.5 bln

France's LVMH seeks to buy jeweler Tiffany for $14.5 bln

France's LVMH seeks to buy jeweler Tiffany for $14.5 bln

LVMH is exploring an acquisition of United States jeweller Tiffany & Co in what would be the biggest purchase by the French owner of Louis Vuitton, according to people familiar with the matter.

Another source familiar with the situation, said the French group had submitted a preliminary, non-binding offer to Tiffany earlier this month.

If successful, though, the purchase would be the biggest deal yet for LVMH founder and Chairman Bernard Arnault, Europe's richest man.

The French company also owns the Bulgari jewel and watch brand, Sephora cosmetics stores, Hublot watches and Dom Perignon Champagne.

Global demand for its products has held up well in recent years, but the same can not be said for Tiffany, which has seen worldwide sales fall this year.

LVMH did not immediately respond to ABC News' request for comment Monday but confirmed news of the proposed acquisition to The Associated Press, saying in a statement that "there can be no assurance that these discussions will result in any agreement".

LVMH's Tiffany bid makes sense, but the US$14.5 billion rumored price may be too little, as the 14x Ebitda valuation compares with 20x-plus for LVMH's Bulgari and Swatch's Harry Winston deals.

LVMH said on Monday that it offered 120 dollars per share for Tiffany.

Tiffany was founded in NY in 1837 and now runs about 300 outlets worldwide.

This business accounted for 9 per cent of revenue and 7 per cent of earnings in 2018, about only a fifth the size of its core fashion and handbag unit, home to Christian Dior, Givenchy and other brands like Fendi in addition to Vuitton.

For LVMH, it would bolster its smallest and newest business division, jewelry and watches, which includes Bulgari jewelry, Hublot and Tag Heuer watches, and expand its exposure to the bridal and diamond category and to US luxury shoppers.

The New York-based company said Monday that it was considering the offer.

The protests in Hong Kong also affected the jeweler's performance, as the city has always been considered a major shopping hub which draws large flows of tourists, including many from across Asia and mainland China.

LVMH shares were up 1% in early trading, touching highs last seen in July.

In jewelry, LVMH is not as strong as in fashion. He wrote in a note Sunday that jewelry is one of the most attractive categories in the luxury sector, "with only a handful of truly global players, and Tiffany has a proven brand equity in Asia".

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