The very high end of the jewellery market, one of the fastest growing sectors in the luxury space, seems set for further consolidation as luxury conglomerate LVMH Moet Hennessy – Louis Vuitton confirmed that it “held preliminary discussions regarding a possible transaction with Tiffany & Co” and the latter also informed investors that it had received, and is “carefully reviewing” the proposal, “to determine the course of action it believes is in the best interests of the Company and its shareholders”.

While LVMH made no further disclosures other than confirming what it described as “market rumours”, Tiffany stated that the “unsolicited, non-binding proposal” was to acquire the company “for $120 per share in cash”, which represented a premium of 22% over the then prevailing price of the stock, and would amount to about US$ 14.5  billion. Tiffany & Co also advised its shareholders that they need take no immediate action regarding the proposal.

Analysts say that the proposed acquisition could be the biggest ever to date by the conglomerate owned by France’s richest man, Bernard Arnault, which had purchased Bulgari in 2011, transforming its then fledgling, and still smallest business division, jewellery and watches.

The acquisition of Tiffany, if completed, will also give LVMH a foothold in the luxury end of the US jewellery market, the largest in the world, as well as bolster its presence in China and in the global bridal and diamond segments of the market, Reuters said. The news agency also added that jewellery has been one of the best performing areas in the luxury industry as per a report prepared by consultancy Bain & Co.

It is estimated that Tiffany is about one-third the size of LVMH, and that a successful completion of the transaction would give LVMH a major boost in the luxury segment overall. It would also give the French company an edge over its nearest rivals Kering, owner of Gucci and Switzerland’s Richemont, which owns Cartier, both of which are also seeking to strengthen their presence in the higher-end of the jewellery market.

However, many market watchers believe that Tiffany may reject the initial offer and seek a higher price which could in turn, unleash a fresh battle to gain control of the 182-year old legendary US jeweller.