LVMH Makes a Move for Tiffany's

Bernard Arnault's French luxury conglomerate LVMH is said to have approached Tiffany & Co. in an all cash offer that values the business at $14.5 billion. This will be LVMH's first major non-fashion American brand. Last year the company spent over $2.6 billion buying luxury hotel brand Belmond and in 2017 it spent about $13 billion acquiring a controlling stake in Dior.

Tiffany & Co. is an American jewellery and specialty retailer headquartered in the famous Fifth Avenue building in Midtown Manhattan. LVMH's bid for Tiffany's gives it a 22% premium, equivalent to over 15.5 times its expected EBITDA from Friday's closing price and more than 30% above its average price in recent trading weeks.

We know LVMH has a very cash generative business and as a result the company is one of the few that has successfully grown through good acquisitions. Eight years ago the company bought Italian jeweller Bulgari at a 60% premium to add to its jewellery division and Tiffany & Co. will boost LVMH's efforts in this sector.

LVMH is still my favourite luxury company as it is one of the few that is truly diversified across the luxury spectrum with no bias towards one customer or sector, at the right price it can make for an interesting investment.