As LVMH Offers to Purchase Tiffany, Moncler-Kering Deal Turns Out Hoax
Announcements made on Dec 5 revealed, the deal between top executive of puffer jacket maker Moncler and Gucci-owner Kering was a rumour. The nulled speculations of a takeover by Kering led to a rise in the shares of Remo Ruffini owned, Moncler.
Speculation increased the expectations of more deal making in a luxury industry dominated by many conglomerates, even then some banking and sector sources said they were sceptical about the positive outcomes for both sides.
Having bought Moncler in 2003, CEO Remo Ruffini said in a statement that every now and then “He maintains contacts and interacts with investors and other sector participants, including the Kering group, in order to explore strategic potential opportunities to further promote the successful development of Moncler.”
He added, “At the moment, however, there is not any concrete hypothesis under consideration.”
Banking sources claim that the Italian brand will possibly demand a hefty premium as it is worth over 10 billion euros ($11 billion) on the stock market. Consequently, it would not suddenly rebalance Kering’s portfolio.
At a time when strong competitors like LVMH and Kering are trying to increase their popularity by increasing spending on social media marketing and the hire of star designers, the speculation around Moncler can impact its sales.
Two sources familiar with the matter affirm that Ruffini had spoken to Kering about a potential deal near the flotation time. The latter, meanwhile, is expected to look for an acquisition to offset its reliance on Italian fashion label Gucci for better profits.
Speaking on the matter, a Bernstein analyst Luca Solca said, “Remo Ruffini and his senior management team have driven the brand in near perfect manner – taking it to unprecedented heights. Adding value by acquiring Moncler is therefore not easy.”
Moreover, competitors seem better equipped to absorb the hit from Hong Kong protests and make long-term investments in mainland China market.
Recently, Paris based rival of Moncler, LVMH (owned by Louis Vuitton) offered to purchase the US Jeweller Tiffany for $16.2 billion in an all-cash deal. The Q3 results listed by Tiffany showed the firm failing to achieve Wall Street expectations on both top and bottom lines. Although sales were the same as 2018, but below the estimations of $1.037 billion of analysts. Resulting from a 17 percent decline in net income from 2018, earnings per share also missed the expected $0.85 at just $0.65.
In a press release held recently, Tiffany blamed the disruptions in Hong Kong market as a major reason for its performance in Hong Kong. Besides, Hong Kong, world sales surged four percent from 2018 and sales at stores open from a year rose by three percent.
After Bloomberg asserted the possibility of an upcoming deal between Moncler-Kering, shares of former made record breaking sales in Milan and were 8.9 percent up early trading. The Paris stock market reported shares rose by 1 percent.
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