Tiffany shares jump on takeover speculation

NEW YORK (Reuters) - Shares of Tiffany & Co. Inc. (TIF.N) climbed as much as 6.8 percent and its options volume surged on Monday on renewed speculation the fine jewelry retailer could be a takeover target.

Tiffany shares closed up nearly 4 percent, or $1.93, at $51.91, after rising as high as $53.36 on the New York Stock Exchange.

Renewed chatter is that "LVMH is interested in acquiring Tiffany," said Paul Foster, options strategist at theflyonthewall.com, a Web site that tracks daily equity option and stock movement.

French-based LVMH Moet Hennessy Louis Vuitton (LVMH.PA), which sells luxury brands Fendi, TAG Heuer and Chaumet, has been mentioned as a possible buyer in earlier reports.

Tiffany spokesman Mark Aaron said the New York-based company does not comment on stock activity. A LVMH spokesman said the company does not comment on market rumors.

"According to our computer model, Tiffany share volume soared 350 percent to 5.5 million (late on Monday) as takeover fever hit the company," said Jon Najarian, co-founder of Web site optionmonster.com.

A total of 5.6 million shares traded in Tiffany in composite trading, according to Reuters data.

"Its option turnover was even more dramatic," Najarian added. Throughout the day, investors focused on Tiffany calls, giving them the right to buy shares at a given price and time, as many placed bets on further stock gains.

In all, 21,395 calls compared to 1,951 puts changed hands in Tiffany, nearly 11 times its average daily volume, according to market research firm Track Data.

Among the busiest options were the July calls allowing market participants to buy Tiffany shares at $55 a piece.

These calls, with strike prices of $3 above the spot stock price, cost 55 cents a contract, up 45 cents on the day. Later, some players cashed in those calls to collect the premium, Najarian added.

In February, Trian Fund Management, which has a 5.5 percent stake in Tiffany and is headed by activist investor Nelson Peltz, said it will look to help the company "improve its margins and its earnings per share growth and address various other operational and strategic issues."

"Whether the buying is due to a rumor that LVMH is interested, or that activist shareholder Nelson Peltz has designs on increasing his stake, we can't be certain," Najarian said, but added that the action was still worth noting, even as Tiffany shares eased from their initial spike.

Earlier this year, Tiffany said it retained Evercore Partners to advise on two potential transactions.

In a regulatory filing in June, the company acknowledged, "Evercore is currently assisting the company's management in exploring various strategic alternatives related to its Little Switzerland Inc. business."

Tiffany also said in the filing that Evercore is not advising management on any other matter.