Tiffany may be Acquired at 40% premium for $12 Billion

Tiffany is a strong global brand and it is being valued at about $12 billion. At least that’s what you have to pay if you want to acquire it. The world’s second-largest jewelry retailer is best known for its engagement rings. It has bounced back after the recession to boost its valuation over three times. It might even earn a premium over that valuation if a takeover bid goes through. Their twenty year profit-sharing agreement with Swatch, the biggest maker of luxury watches was terminated prematurely, clearing the way for a takeover.

LVMH Moet Hennessy Louis Vuitton SA and Cie. Financiere Richemont SA are the contenders who could go for the takeover bid. Analysts and experts believe that Tiffany, even at an inflated valuation is worth considering as it is projected to grow at 30% in the current year. It is very strong internationally as over 50% of its sales come from outside US. It has plans in place for opening number of new stores both in Europe and Asia. The market is all excited as an acquisition of Tiffany would be twice as large as the biggest purchase of a jewelry retailer.

Tiffany refused to comment on the matter but the strong rumors saw its shares climb 4.5%. Michael Kowalski, CEO of Tiffany has been steering the company on a strong growth path. He has not only opened new stores but introduced the company’s first handbag collection in 20 years, a line of yellow diamonds and men’s briefcases, purses, wallets and business-card holders. The sales for the coming year is projected at a healthy $4 billion. The entire management team is credited for the smart growth the company has achieved. The only concern is the likely slow down and the uncertainty that has taken over the American economy. In any case, there will be lots of ups and downs before the deal is closed.

Via: bloomberg

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