Tiffany said the LVMH proposal valued it at around $120 per share, a 21.8% premium to its Friday closing price of $98.55 per share, as the French group behind luxury labels such as Christian Dior, Fendi and Givenchy eyes a long-awaited move into the U.S. market.
"While the parties are not in discussions, Tiffany's Board of Directors, consistent with its fiduciary responsibilities, is carefully reviewing the proposal, with the assistance of independent financial and legal advisors, to determine the course of action it believes is in the best interests of the Company and its shareholders," the company said in statement. "Tiffany shareholders need take no action at this time."
Tiffany shares were marked 31% higher by mid-day trading Monday to change hands at $129.00 each, a move that would extend the stock's year-to-date gain to around 60%. LVMH shares edged 0.25% higher in Paris to trade at €384.85. each, extending their 2019 gain to around 49%.
"In light of recent market rumours, the LVMH Group confirms that it has held preliminary discussions regarding a possible transaction with Tiffany," the company said in a statement Monday. "There can be no assurance that these discussions will result in any agreement."
Analysts have noted that more than half of Tiffany's sales come from outside the U.S., providing LVMH with both a doorway into the domestic luxury market while supporting the group's growth in key markets such as Europe and China.
"We believe that a potential acquisition of Tiffany by LVMH makes strong strategic logic," said KeyBank Capital analyst Edward Yruma, who expects to see a transaction between the two groups in the $125 to $130 per share range. "Continuing consolidation in luxury makes sense given the shift to e-comm, importance of the Chinese market (we believe one-third of sales, across all geographies) and likely synergies."