TIF - Why Shareholders Approve of LVMH's Acquisition of Tiffany
In November, the iconic American jeweler Tiffany (NYSE: TIF) agreed to sell itself to the French luxury powerhouse LVMH (OTC: LVMHF) (OTC: LVMUY) for a whopping $16.2 billion. The deal came after months of speculation and an earlier rejected offer at $120 per share. In the end, LVMH was able to clinch the deal after raising its offer price to $135 per share -- a nice premium over Tiffany's $90 share price in October.
After inking such a large deal at a premium price, an acquirer often sees its stock price decline. But in this case, LVMH's stock actually moved higher immediately after the deal was announced -- signifying the market's approval. What is it about this deal that has shareholders bullish?
At its core, LVMH is a portfolio of global luxury brands including Louis Vuitton handbags, Dom Perignon champagne, Hublot watches, and Bulgari jewelry. These luxury assets have been carefully selected and acquired over the years.