Analyst Oliver Chen ran the numbers on an hypothetical LVMH deal for Richemont and found a big price tag and some big hurdles.
-Richemont combination that could see the two try to build scale to provide a more effective counterweight. acquisition of Tiffany & Co. in 2021Oliver Chen, an analyst at TD Cowen, followed up on “unsubstantiated news reports” that LVMH chief Bernard Arnault was interested in Richemont’s Cartier brand, and ran the numbers on just what an LVMH mega acquisition would look like.
Chen estimated the deal would be dilutive to LVMH’s finances through year two and that it would face “several obstacles,” including: “LVMH has meaningful expertise in raising prices and investing in innovation that captivates younger and broader customers, while maintaining brand prestige,” Chen noted. “A recent example includes doubling the Tiffany margins as of fiscal 2022 year-end compared to when the acquisition finalized, while initiating a steady stream of powerful innovation we have seen already with Beyoncé, Nike, Jay-Z, Basquiat and the Lock Bracelet.
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