LVMH bags jeweler Bulgari amounting to 5.2 billion US-dollar-deal

12:52 AM amounting, billion, Bulgari, jeweler, USdollardeal No Comments

Astrid Wendlandt, Ian Simpson

PARIS/Milan (Reuters) - French luxury group, which Italian buy LVMH is peer-Bulgari for EUR 3.7 billion ($ 5.2 billion), add luster in the jewelry business and increase the exposure to emerging markets.

The offer, a 60-percent premium for Bulgari of the average market price in the last month, was the return of the consolidation in the luxury market, herald, again from the 2009-break-in much faster than analysts expected when leaving.

Bulgari will benefit from World No. 1 LVMH's global retail network, improve margins through cost-sharing and the owner of Louis Vuitton Handbags, close the gap with major watch and jewelry company Richemont and Swatch help.

Analysts said that the high cost savings was justified.

"The high price is likely explained by the fact that there were rival suitors,", said Gerard Moulin Delubas asset management in Paris Fund Manager.

Rival bidders were close to the Group of told of Reuters on Monday of the Richemont group and PPR, sources. Both groups declined to comment.

Any acquisition of assets controlled family paying a considerable premium to sell to convince families is usually a buyer.

The deal estimated to be the ratio of enterprise value to the sales of about 3 times in comparison with other possible takeover candidates Burberry Bulgari 2.7 time and Tiffany to 2.3 times by forward sale estimates.

"This is more in line with historic deals in the sector and the recent acquisition (online luxury fashion retailer) net-a-Porter of Richemont," enterprise value was about 3 times to sales, Deutsche Bank said in a note.

The total value of the transaction, including 600 million euro of convertible bonds, was 4.3 billion. It is for minority shareholders buy paid with 1.9 billion euros of new LVMH shares and cash 2.4 billion are financed to half with debts and half with LVMH's cash.

Led by Arnault, LVMH was built on acquisitions and its brands also Chaumet and Fred jewelry, Celine and Kenzo fashion, Hennessy cognac and champagne Moet & Chandon.

"Bulgari is one of the most famous jewelry brands in the world, with plenty of potential to grow on the back of LVMH's global distribution reach and financial muscle," Bernstein luxury analyst Luca Solca said.

The business is LVMH's watch and jewelry business to 10 percent of turnover and about 6 percent to create estimates of analysts operating profit double.

Analysts believe that rival groups on a fresh consolidation wave, encouraged by the strong sales to start visibility you get from large luxury emerging economies such as China could lead the business.

Bulgari , founded in 1884, had long been seen as a potential target, their finances have freed large storage investment, weak if its sales dropped. There was regular speculation Swiss Swatch Group could take it over.

The transaction occurs after a 20.2 percent stake in smaller rival Hermes LVMH set up, that like Bulgari, family is controlled. This movement asked Hermes to defend by a controlling family block holding within the Group of LVMH's progress.

LVMH to buy the family holding at Bulgari 50.4 percent of Bulgari through the issuance of 16.5 million LVMH shares. [ID: nBIA07382] [ID: nBIA07381]. In exchange the Bulgari family 5-percent stake in LVMH and second-largest family keep a 3, become shareholders of the luxury group.

"It is important that the quality of high-quality paper is the paper, you will receive and LVMH," Bulgari Chief Executive Francesco Trapani in a conference call, explaining why the jeweler had chosen to do a deal with LVMH said.

The French Group launches a bid for the rest of Bulgari shares at 12.25 euros per share.

NUMBER TWO SHAREHOLDERS

The Bulgari family will appoint two representatives to the Board of Directors of LVMH, during Trapani LVMH's executive Committee will join and lead their watches and jewelry activities of the second half.

"Should this be possible targets in the area as a catalyst for the," a French broker said. "As such, we would (see...)" as positive for Burberry Group plc in particular. "Burberry shares rose by 3.6 percent."

However, the shares in the family were controlled Italian luxury leather were more than 6 percent's maker death on Monday on the back of speculation that you could be the next target.

Death's founder and Chairman Diego della Valle sits in the Board of Directors of LVMH and owns a small stake in the French luxury giant.

Bulgari shares percent 12.07 EUR closed during LVMH by 1.2% to ?112.95 closed. (Additional Antonella Ciancio in Milan and Silke Koltrowitz in Zurich;) (Editing by David Cowell)

Copyright 2011 Thomson Reuters.