LVMH adds jewel to crown with €3.7bn Bulgari deal
Published 08/03/2011 | 05:00
French luxury group LVMH is buying Italian peer Bulgari for €3.7bn, adding lustre to its jewellery business and broadening its exposure to emerging markets.
The offer, at a 60pc premium to Bulgari's average share price over the past month, could herald the return of consolidation in the luxury market, which bounced back from the 2009 slump much faster than analysts expected.
Bulgari will benefit from world No 1 LVMH's global retail network, improve margins through cost-sharing and help the owner of Louis Vuitton handbags close the gap with bigger watch and jewellery companies Richemont and Swatch.
Analysts said the high price was justified by the savings.
"The high price is explained by the fact that there were rival suitors," said fund manager Gerard Moulin from Delubas Asset Management in Paris.
Rival bidders included the Richemont group and PPR, sources close to the groups said yesterday. Both groups declined to comment.
Any acquisition of family-controlled assets usually sees a buyer paying a sizeable premium to convince families to sell.
The deal valued Bulgari on a ratio of enterprise value to sales of about three times using forward sales estimates.
"This multiple is in line with historic deals in the sector and the recent acquisition of (online fashion retailer) Net-a-porter by Richemont," which was roughly three times enterprise value to sales, Deutsche Bank said.