France’s LVMH will take over Bulgari in a deal which values the Italian jeweller at €3.7bn (£3.18bn) and gives the No.1 luxury group more clout in the sector and bigger exposure to emerging markets.
The offer, which priced Bulgari's shares at a 60 per cent premium to its average level over the last month, could herald the return of consolidation in the luxury market, which bounced back from the 2009 slump much faster than analysts expected.
For LVMH, adding Bulgari will allow the French luxury group to leverage its global retail network and boost margins by sharing costs.
Founded by billionaire Bernard Arnault, LVMH is built solely on acquisitions.
Its brands now include Louis Vuitton handbags, Chaumet and Fred jewellery, Celine and Kenzo fashion, Hennessy cognac and Moet & Chandon champagne.
"Bulgari is one of the best known jewellery brands in the world, with lots of potential to grow on the back of LVMH's global distribution reach and financial muscle," Bernstein luxury analyst Luca Solca said.
"Media buying and retail development would benefit from the deal. Watches and jewellery is indeed the weakest area at LVMH, where its brands are trailing larger and better known competitors."
Bulgari had long been seen as a potential target having weakened its finances by embarking on big store investments when its sales were falling. There was regular speculation Switzerland's Swatch Group AG could take it over.
The transaction comes after LVMH built up a 20.2 per cent stake in smaller rival Hermes which, like Bulgari, is family controlled.
That move prompted Hermes to fight back by creating a controlling family holding within the group to block LVMH's advance.
LVMH will buy 50.4 per cent of Bulgari, issuing 16.5 million shares in exchange for 152.5 million shares held by the Bulgari family, the companies said in statements.
City A.M. Reporter