hares in Cartier owner Richemont rose today after an online fashion publication said it had been approached by French luxury goods group Kering for a potential merger in January but had rejected the informal offer. 

Paris-based Miss Tweed, which specialises in fashion and luxury, wrote that a cash-and-shares proposal to merge had been made directly by Kering CEO François-Henri Pinault to Richemont chairman and controlling shareholder, Johann Rupert. 

The report said that Rupert, who said in November he had no plans to sell, was unsatisfied with the terms and did not submit them to Richemont's board. 

Speculation over a possible tie-up between Richemont and Gucci owner Kering have been circulating for years but have gathered steam in recent months after LVMH's takeover of US jeweller Tiffany put pressure on rivals to scale up. 

Kering, which also owns Bottega Veneta and Yves Saint Laurent, is strong in fashion and leather goods.

Richemont, whose brands include Van Cleef & Arpels and Jaeger-LeCoultre, is best known for watches and jewellery. 

But while combining the two would make sense strategically, the family ownership structure at both companies is a big hurdle to what would be the biggest deal ever in the luxury sector. 

Kering has a market capitalisation of €74 billion compared to Richemont's 47 billion Swiss francs ($50.8 billion). 

Rupert's family investment vehicle owns 10% of Richemont's equity, but it has 51% of voting rights due to a complex dual share scheme. Kering is 41%-owned by Artemis, the holding company controlled by the Pinault family. 

UBS said in a note that a deal between Kering and Richemont would create a luxury powerhouse capable of challenging LVMH's dominance in the market. 

"Combining the two mega brands of the soft and hard luxury industry, Gucci and Cartier, could address the perceived higher fashion risk of Kering and the perception of mismanagement of Richemont's smaller brands in its portfolio," it said.
 

UBS said in a note that a deal between Kering and Richemont would create a luxury powerhouse capable of challenging LVMH's dominance in the market. 

"Combining the two mega brands of the soft and hard luxury industry, Gucci and Cartier, could address the perceived higher fashion risk of Kering and the perception of mismanagement of Richemont's smaller brands in its portfolio," it said.