Analyst: Tiffany A 'Motivated' Seller, But Not At $120

Tiffany & Co. TIF confirmed Monday that it received an unsolicited and non-binding takeover proposal from LVMH Moet Hennessy Louis Vuitton LVMUY at $120 per share.

Tiffany Is Interested, But Not At $120

Tiffany is open to a deal to sell itself to LVMH, but not at $120 per share, Oppenheimer analyst Brian Nagel said Monday on CNBC's "Squawk Box." 

A more reasonable price tag would be $140 per share, which would coincide with Tiffany's July 2018 highs, he said. 

"I'm hard-pressed to see the company sell for a price that's lower than where the stock traded on its own." 

LVMH paid around four to 4.2 times sales for Bulgari, which is "similar" to Tiffany, the analyst said. Applying a similar multiple supports a more "likely" price tag of $140 per share, he said. 

Tiffany is run by a relatively new management team and is considered to be a "motivated seller," Nagel said.

The retailer deserves credit for behind-the-scenes moves to reposition its products, but any benefit has yet to show up in financial results, he said. 

Access To Gen-Z

Tiffany's positioning at the lower end of the luxury spectrum would give LVMH exposure to Gen-Z and millennials, Bloomberg Intelligence's Deborah Aitken said on "Bloomberg Surveillance" Monday.

LVMH could also leverage its exposure across Asia to support Tiffany sales, she said. 

LVMH has the capacity to increase its offer in the event of a bidding war, and a higher price tag would be consistent with prior acquisitions, Aitken said.

LVMH's offer implies a multiple of around 14 times EBITDA, which is notably short of prior deals, including 23 times EBITDA for Bulgari, Swatch and Harry Winston Diamond, she said. 

Update: LVMH Bid 'Highly Unlikely' At $139

Tiffany's board of directors will likely gather in the next week or two to review its options, CNBC's David Faber reported on "Squawk on the Street."

Tiffany only hired bankers late last week to advise on a potential deal despite the fact that LVMH's interest in the company dates back two years, he said.

Sources close to the situation are suggesting it is "highly unlikely" LVMH will offer $139 per share, the CNBC host said.

It is also "unlikely" the French company has any desire to begin a hostile campaign, he said. 

Tiffany shares were up 31.77% at $129.85 at the time of publication, while over-the-counter LVMH shares were up 0.2% at $85.35. 

Related Links:

Louis Vuitton Wants To Buy Tiffany For $14.5B, Could Be Rejected

Analyst's Early Reaction To Tiffany's Earnings: 'Better Than Feared'