Owner of Louis Vuitton LVMH approached Tiffany & Co with an acquisition proposal, people familiar with the matter said on Saturday, at a time when luxury jewelry in the US is catching up with the impact of tariffs on its exports to China.
LVMH, which has been looking for ways to expand the US market for years, submitted a tentative non-binding offer to Tiffany earlier this month, one source said.
Tiffany has hired advisers to review LVMH's offer, but has not yet responded to it and there is no certainty that it will make a deal, one source added.
The exact price LVMH offered to buy Tiffany, which has a market cap of $ 1
The sources requested that they not be identified because the matter is confidential. LVMH declined comment until Tiffany immediately responded to a request for comment. Bloomberg News reported earlier Saturday that LVMH is in talks with Tiffany.
LVMH, which has been behind brands such as Fendi, Christian Dior and Givenchy, as well as Veuve Cliquot champagne, has for several years emerged as one of the top performers in the high-end retail sector, where not all labels benefit from equal to the booming Chinese appetite for branded goods.
Tiffany, on the other hand, was not so resilient. Beyond tariffs triggered by the US-China trade war, a lower Chinese sales tax also contributed to double-digit sales cuts for Chinese tourists in the United States and other destinations.
High-end brands have long relied on Hong Kong as a major shopping mall that attracts visitors from mainland China in particular, and the four-month demonstrations for democracy are beginning to take off.
However, earlier this month, LVMH, which has a market capitalization of 194 billion euros ($ 215 billion), beat third-quarter sales forecasts despite unrest in Hong Kong. In August, Tiffany reported a quarterly profit, which also beat analysts' expectations thanks to a drop in marketing spending.
Tiffany refreshes its offerings with more affordable items such as pendants and earrings to appeal to millennials who gravitate to lower-priced competitors like the Danish Pandora A / S and Signet Jewelers.
The Paris-based LVMH is controlled by the Arnault family and is managed by Bernard Arnault, France's richest man. Based in New York and best known for its expensive diamond engagement rings, Tiffany operates more than 300 retail stores worldwide.