French luxury conglomerate LVMH is planning to add the jeweller Tiffany & Co to its portfolio of luxury brands. The group has begun the process of what could potentially be a protracted takeover battle for the American jeweller, according to reports in The Times.

At £11.3 billion (£11.5 billion including debt), the acquisition would be the most expensive to date for LVMH, yet Tiffany’s board looked likely to advise against accepting the bid in an attempt to ratchet up the sale price. Indeed, immediately after the bid was announced, Tiffany’s share price shot up by more than 30% to £101, well above the £93.50 LVMH is offering, in expectation that a rival will enter the fray to start a bidding war.

Tiffany has already advised shareholders to hold off, according to Lisa Jucca on Breakingviews. But it’ll be hard for the jeweller to remain independent. On current multiples it will need to increase earnings by nearly 30% to make shareholders believe it is worth more than the £11.3 billion on offer. Investors are likely to prefer the certainty of cash today – so Bogliolo’s best bet is to fight for a better price, in the hope that more interest will come from rival suitors, such as Gucci owner Kering, or even Richemont.

Jewellery is a category that the luxury industry can ill afford to ignore, says Bloomberg’s Robert Williams. But a rival bid is unlikely – getting into a battle with LVMH risks becoming an expensive proposition. Richemont is still coming to terms with last year’s acquisition of Yoox Net-a-Porter, while buying Tiffany would push Kering’s debt to several times annual earnings and in doing so dilute the financial strength the company has built up during several years of rapid growth at Gucci.