(Reuters) – Louis Vuitton proprietor LVMH (LVMH.PA) has approached Tiffany & Co (TIF.N) with an acquisition supply, individuals aware of the matter stated on Saturday, at a time when the U.S. luxurious jeweler grapples with the affect of tariffs on its exports to China.
FILE PHOTO: A Tiffany & Co brand is seen outdoors the shop on fifth Ave in New York, New York, U.S., March 19, 2019. REUTERS/Carlo Allegri
LVMH, which has for years been on the lookout for methods to develop within the U.S. market, submitted a preliminary, non-binding supply to Tiffany earlier this month, one of many sources stated.
Tiffany has employed advisers to evaluation LVMH’s supply however has not but responded to it, and there’s no certainty that it’s going to negotiate a deal, one of many sources added.
The precise worth that LVMH was providing to purchase Tiffany, which has a market capitalization of $11.9 billion, couldn’t be discovered.
The sources requested to not be recognized as a result of the matter is confidential. LVMH declined to remark, whereas Tiffany didn’t instantly reply to a request for remark. Bloomberg Information reported earlier on Saturday that LVMH was holding talks with Tiffany.
LVMH, which is behind manufacturers corresponding to Fendi, Christian Dior and Givenchy, in addition to Veuve Cliquot champagne, has stood out for a number of years as one of many prime performers within the upscale retail sector, the place not all labels are benefiting to the identical diploma from booming Chinese language urge for food for branded items.
Tiffany, then again, has not been as resilient. Past the tariffs which were triggered by the commerce conflict between the USA and China, a decrease Chinese language home gross sales tax has additionally contributed to double-digit decreases in its gross sales to Chinese language vacationers in the USA and in different locations.
Excessive-end manufacturers have additionally lengthy relied on Hong Kong as a serious buying hub which pulls guests from mainland China specifically, and 4 months of pro-democracy demonstrations are beginning to take their toll.
Nonetheless, earlier this month LVMH, which has a market capitalization of 194 billion euros ($215 billion), beat gross sales forecasts for the third quarter regardless of the unrest in Hong Kong. In August, Tiffany reported quarterly earnings that additionally beat analysts’ expectations, due to a drop in advertising prices.
Tiffany has been refreshing its choices with extra reasonably priced gadgets corresponding to pendants and earrings, to enchantment to millennials who’ve been gravitating to lower-priced rivals corresponding to Denmark’s Pandora A/S (PNDORA.CO) and Signet Jewelers (SIG.N).
Paris-headquartered LVMH is managed by the Arnault household and is led by Bernard Arnault, France’s richest man. Based mostly in New York and finest identified for its costly diamond engagement rings, Tiffany operates greater than 300 retail shops globally.
Reporting by Greg Roumeliotis in New York; Further reporting by Sarah White in Paris; Modifying by Marguerita Choy and Daniel Wallis