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.
Source Fool.com
