With the goal of expanding its portfolio of luxury brands and sharpening its focus, particularly in its jewelry market, Louis Vuitton Moet Hennessy, also known as LVMH, is eyeing the iconic US brand Tiffany & Co.
LVMH owns upscale brands ranging from Dom Perignon champagne to Hennessy cognac, Hublot watches and cosmetics retailer Sephora.
Earlier this month, the company opened a new Louis Vuitton factory in Texas.
LVMH owns Bulgari but Swiss rival Richemont owns Cartier and Van Cleef & Arpels.
Though Bulgari makes watches costing almost €2 million (US$2.2 million) each, Tiffany's 300 stores globally are known for engagement rings that usually cost a couple of months' pay.
Once LVMH owns Tiffany, it would be the biggest acquisition ever by LVMH, way bigger than the US$7 billion it paid for the fashion house Christian Dior in 2017.
Though there is no guarantee that an agreement would be reached, the ownership of Tiffany would be the largest deal made by a European company in 2019 and the first major transaction of chairman Bernard Arnault since the French multinational luxury goods conglomerate bought the luxury hotel chain Belmond in 2018.
Arnault is already Europe's richest man.
A Tiffany deal would keep him ahead of luxury rivals like Richemont's Johann Rupert and Gucci owner Kering's Pinault family.
Sources say that the company sent Tiffany officials an outline of an all-cash takeover bid at roughly $120 a share.
People familiar with the matter added that the luxury group is conducting talks with Tiffany already.
The jeweler is bouncing back from lackluster sales growth for years after ousting its chief executive amidst pressures from an activist investor two years ago.
The jeweler had been revamping its New York flagship store by targeting younger shoppers, more minorities, same-sex couples and producing a jewelry line for men.
Buying the 182-year-old brand would broaden LVMH's portfolio and would likewise help Tiffany in areas where it is lacking to compete with European rivals.
Tiffany's shares increased 22 percent this year giving it a value of $12 billion.
On Friday, Tiffany's stock closed at $98.55 with a market value close to $12 billion.
LVMH's shares also increased by 49 percent, with a market capitalization of about US$215 billion.
Likewise, beating analysts' estimates, LVMH got a 19 percent sales gain from its fashion and leather business just this recent quarter.
However, the company's nine-month figures show slow growth in its watches and jewelry division.
