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28.10.2019 US & Canada

France's LVMH confirms interest in buying more than breakfast at jeweller Tiffany's

LISTEN OCT 28, 2019

The world's biggest luxury group LVMH, has approached Tiffany & Co about a possible takeover of the U.S. jeweller.

“In light of recent market rumours, LVMH Group confirms it has held preliminary discussions regarding a possible transaction with Tiffany,” the company said in a statement. “There can be no assurance that these discussions will result in any agreement.”

LVMH shares were up 1 percent in early stock market trading, touching highs last seen in July.

“LVMH has ample financial capacity for a deal and we also expect many strategic and financial synergies,” analysts at Cowen investment bank said.

Tiffany - which according to the sources contacted by Reuters news agency has hired advisers to review LVMH's offer but has yet to respond, and may not negotiate a deal - has been caught out by the US-China trade war as Chinese tourists spend less in U.S. shopping hubs.

That has pressured its sales in recent quarters, as it tries like its rivals to push further into mainland China to capture the shift in spending patterns as Chinese clients splurge more at home.

Still, jewellery is more broadly emerging as one of the brightest and fastest-growing spots in the luxury goods sector.

LVMH rival Kering has been looking to expand in this area too, including by launching high-end jewellery lines for its fashion brand Gucci.

Switzerland's Richemont, meanwhile, a sector leader with labels like Cartier, has also been adding to its portfolio, and recently acquired Italy's Buccellati.

“Tiffany is potentially the biggest prey and the only US global luxury brand,” analysts at Jefferies said.

Tiffany, founded in 1837 and a storied name in jewellery, is one of the sector's top prizes.

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