Tiffany surges 32% after a shiny acquisition offer from LVMH
Snacks / Monday, October 28, 2019
But did they get down on one knee?... Luxe-glomerate Louis Vuitton Moët Hennessy (aka LVMH) just offered $14.5B to buy up jewelry icon Tiffany. LVMH is run by the world's richest non-American (Bernard Arnault) and it owns 75 brands, from fancy champagne to fancy handbags. But here's the potential couple:
- LVMH: Its founding goes way back to 1987, it's headquartered in Paris, and worth $214B.
- Tiffany: Founded in 1837, Tiffany is HQ'd in NYC — but worth 1/14 of LVMH.
Breakfast at Tiffany's $215 semi-affordable earrings display... Tiff's board hasn't decided to accept/reject the offer. But if it goes through, the acquisition will up LVMH's jewelry game from just 8% of its sales today. Meanwhile, 92% of Tiffany's revenues are straight-up jewelry (and over a quarter of that is engagement-related).
This acquisition come down to T.L.C... Timing. Location. Customer. (Forget "the 4 C's"):
- Timing: With Chinese tourism down, Tiffany's sales dropped 3% last quarter — and the stock price has fallen 1/3 from its all-time high.
- Location: LVMH is focused on growing in the US with a new Texas factory and a partnership with Rihanna — America has more millionaires (19M) than France, UK, Germany, China, and Japan. Combined.
- Customer: Tiffany wants to be the “luxe for less" jeweler by tossing Dakota Fanning in some commercials — LVMH craves that millennial appeal.