Stock markets and industry observers shrugged off reports that LVMH Moët Hennessy Louis Vuitton might acquire Burberry or Tiffany in order to bolster its slowing revenue growth.
This story first appeared in the February 25, 2013 issue of WWD. Subscribe Today.
While LVMH, Burberry and Tiffany all declined comment on the speculation, sources close to LVMH said the French luxury giant is unlikely to buy either of the two companies.
On Friday, shares in Burberry gained as much as 3 percent following a Bloomberg report suggesting LVMH is poised to make an acquisition, with analysts touting Burberry and Tiffany as likely and interesting targets.
LVMH stock closed up 1.5 percent Friday to 132.45 euros, or $174.60 at current exchange, on the Paris Bourse. Shares in Burberry Group plc closed up 1 percent to 13.82 pounds on the London Stock Exchange. Tiffany investors essentially shrugged off the possibility as part of the routine rumor mill — the company’s been the subject of merger talks on and off in the past few years. Shares of Tiffany & Co. inched up nearly 0.2 percent to close at $64.38 in trading Friday on the New York Stock Exchange.
Burberry is 100 percent listed, with Capital Group holding the biggest stake at about 8 percent.
Market rumors about Burberry being in play surface periodically. Berenberg Bank analyst John Guy has repeatedly recommended an LVMH takeover of Burberry, most recently in a report published Feb. 15, arguing it makes sense in terms of addressing a gap in the French group’s portfolio.
To be sure, LVMH has the means to bulk up its stable of more than 60 brands, which span fashion, leather goods, jewelry, watches, retail, beauty products, wines and spirits.
By yearend 2012, LVMH had available cash flow (before financial investments, capital operations and financial operations) of 2.47 billion euros, or $3.18 billion at average exchange, up 297 percent over last year.
The company’s 2012 net debt declined 8.6 percent to 4.26 billion euros, or $5.48 billion.