Tiffany and Adobe on Bernheim, Dreyfus's list of potential 2011 takeover targets

Paris-based M&A investment manager, Bernheim, Dreyfus, has unveiled research designed to uncover possible or potential bid targets during 2011. Among other names, the luxury jeweller Tiffany and software company, Adobe Systems, are seen as being particularly attractive.

Tiffany & Co is a jewellery and specialty retailer whose principal merchandise offering is fine jewellery and except its one Tiffany brand its portfolio also consists out of the Elsa Peretti, Frank Gehry, Paloma Picasso and Jean Schlumberger brands. Tiffany with sales of USD2,7 billion in 2009 is operating worldwide but with greatest presence in America and Japan totalling together 70% of sales.

The recession resulted in deep cuts in Tiffany’s revenues. Luxury products are the first one to go when consumers start to save but the harder the fall the greater is also the bounce. 2010 has been a splendid year for Tiffany with a surge in both sales and stock price and with a great outlook and a consolidating market there is still plenty of room for a continuing growth in the stock. Being part of a luxury conglomerate Tiffany would be able to increase its foot print and have a stronger position towards its stake holders.

There are three likely acquirers for Tiffany and the first one is Richemont which is the world’s largest jewellery maker. A second potential acquirer is the Swatch Group, the world’s largest watch manufacturer which also is operating in the fine jewellery industry. The third potential acquirer is LVMH. The luxury conglomerate has a market capitalisation of EUR61 billion and a great variety of independent luxury brands in its portfolio.

Adobe Systems is a diversified software company that offers a line of creative, business, Web and mobile software and services used by creative professionals, knowledge workers and other consumers all engaging with content and experiences across multiple operating systems, devices and media.

There are lots of things going on in the software producing market. The rebirth of Apple, the explosive growth of Google, which constantly spreads into new business areas, all meanwhile Microsoft more and more is stagnating. The result of this has been a consolidating market with an intense fight for pole position where Oracle’s EUR7.1bn acquisition of Sun Microsystems last year was the greatest. Adobe with its market leading products, a unique customer reach and a strong uncapitalised growth from future upgrades of existing products is an interesting object for all of the big three.

The Bernheim, Dreyfus research also named French electronics manufacturer Ingenico and aerospace and turbine engineers, Meggitt as being potentially in play through the year.

The Bernheim, Dreyfus Diva Synergy Fund was one of the leading performers in the hedge fund M&A event driven space during 2010 with full year returns of +27.91% (euro class) and +27.35% (dollar). Berheim, Dreyfus research anticipates continuing growth and therefore increasing investment opportunities, in the M&A space through 2011.