Louis Vuitton parent about to acquire US jeweller Tiffany & Co

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Luxury house LVMH has reportedly made a US$14.5 billion offer to acquire high-end jewelry retailer Tiffany & Co as part of an ongoing attempt to expand into the US market.
The jewelry firm currently has a market valuation of $11.9 billion, but the Financial Times quotes sources saying the US company is likely to reject the offer saying it undervalues the business.
The offer was lodged earlier this month, valued at US$120 per share which represented a 30-per-cent premium on the share price at the time. Since then, Tiffany’s share price has increased, so the offer now represents a smaller 22-per-cent premium but is way lower than Tiffany’s share price in July last year when it peaked at $139.50.
A Reuters report stated that the potential acquisition comes “at a time when the US luxury jeweler grapples with the impact of tariffs on its exports to China”. The report said Tiffany has yet to respond and is currently reviewing the possible deal.
Unlike other luxury firms, LVMH’s business has not appeared to suffer a significant impact from the Sino-US trade war or pro-democracy protests in Hong Kong, where the premium retail market has been hit by a decrease in Chinese tourists from the mainland. The firm beat sales forecasts for this year’s third quarter.
Neither company has commented on the bid.
Questions & Answers
Q.Why is Tiffany & Co expected to reject LVMH's offer?
Why is Tiffany & Co expected to reject LVMH's offer?
Sources quoted by the Financial Times suggest that Tiffany & Co is likely to reject the offer. They believe the proposed US$14.5 billion acquisition undervalues the business.
Q.How is LVMH performing compared to other luxury firms in the current market climate?
How is LVMH performing compared to other luxury firms in the current market climate?
Unlike other luxury firms, LVMH's business has not significantly suffered from the Sino-US trade war or Hong Kong protests. The firm even beat sales forecasts for this year’s third quarter.
Q.What challenges is Tiffany & Co currently facing according to the Reuters report?
What challenges is Tiffany & Co currently facing according to the Reuters report?
A Reuters report stated that Tiffany & Co is currently grappling with the impact of tariffs on its exports to China. This situation coincides with the potential acquisition by LVMH.
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