Preliminary discussions to buy United States jeweller Tiffany & Co have been held by the French luxury conglomerate LVMH, it confirmed recently. “There can be no assurance that these discussions will result in any agreement”, LVMH said in a statement released lately.

According to The Wall Street Journal$120 a share, or about $14.4bn has been for purchasing Tiffany by the French group.

At the close of Wall Street trading on Friday, the stock market value of the jeweler was about $11.9bn.

For the French luxury group which had presence and dominance in a number of segments such as luxury, with a perpetual presence in sectors such as fashion, wine, perfumes and cosmetics, the confirmation of a deal to purchase Tiffany will result in one of the largest acquisitions by the French group.

“They say diamonds are a girl’s best friend and Europe’s richest man, and owner of Louis Vuitton Bernard Arnault, obviously feels that adding US jeweller Tiffany to his list of brands will prompt a similar uplift to LVMH’s global revenues,” said Michael Hewson, chief market analyst at CMC Markets UK.

“His attempt to put a $14.5bn ring on Tiffany, having already added Bulgari a couple of years ago, is likely to take the fight in this sector to its closest rival Richemont, who own Cartier, and would help LVMH in gaining better access to US markets,” he said.

However, Tiffany shareholders were “unlikely to accept this initial bid” and could postpone the deal for more, Hewson added.

A wide range of brands, such as Moet & Chandon, Christian Dior, Louis Vuitton and Bulgari are operated by LVMH. One of the major competitors of the company is the Kering group, the owner of the brands Gucci and Saint Laurent. Other competitors include the owner of jewellers Cartier and Van Cleef & Arpels – Richemont SA.

The offer for the purchase of Tiffany was made at a time when the US company is struggling because of stagnation of demand and sale in China because of the slowing domestic economy there which has dissuaded Chinese customers form splurging on luxury products. China accounts for a significant part of the revenues generated by Tiffany.

Furthermore, consumers outside of the US have found the price of Tiffany products getting increased because of the strength of the US dollar against other currencies.

The long running US-China trade war that started well over a year ago in June last year as well as the broad anti-corruption campaign launched by Chinese President Xi Jinping which has prevented the Chinese consumers of luxury from purchasing and offering extravagant gifts offered by businessmen and bureaucrats has caused more problems for the global luxury industry.

(Adapted from Aljazera.com)

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