LVMH, the French owner of Louis Vuitton and Givenchy, offered to buy jeweler Tiffany & Co. for about $14.5 billion in a deal that would expand its access to USA luxury shoppers, people familiar with the situation said.
Luxury behemoth LVMH has confirmed that it has held "preliminary discussions" about possibly acquiring Tiffany & Co.
LVMH is controlled by the Arnault family with Bernard Arnault, France's richest man leading the group.
Global demand for its products has held up well in recent years, but the same can not be said for Tiffany, which has seen worldwide sales fall this year. A takeover of Tiffany would be bigger than the $7 billion LVMH paid for the rest of Christian Dior in 2017.
While Tiffany has hired advisers to review the offer, it has not yet responded and there is no guarantee that the sides will reach an agreement, reports said.
"We believe Tiffany has many characteristics that are hard to replicate and represent competitive advantages", wrote Oliver Chen, luxury analyst at Cowen & Co., an investment research firm.
Based in NY and best known for its diamond engagement rings, Tiffany operates more than 300 retail stores globally. Currently, LVMH owns luxury watchmakers Hublot and TAG Heuer. An acquisition would give LVMH an iconic 182-year-old USA brand known for its robin's egg blue boxes and its role as a favourite haunt of Holly Golightly in Truman Capote's "Breakfast at Tiffany's".
The offer comes as luxury goods companies have been wrestling with changing habits of shoppers who are increasingly buying online.
An acquisition would further diversify the conglomerate, which has been riding a wave of luxury demand in China but faces risks including that country's trade war with the US and the months-long anti-Beijing protests in Hong Kong.
Tiffany is one of the jewelry sector's top prizes. Its shares jumped almost 30% or $28.81, to $127.37 in early morning trading.
"Tiffany is potentially the biggest prey and the only US global luxury brand", analysts at Jefferies said.
The French luxury goods giant has been looking for a way into the United States market for years, one source told Reuters.
Kering has been looking to expand in this area, including by launching high-end jewelry lines for its fashion brand Gucci.
LVMH's rivals are also bulking up in jewelry.