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Lionel Melka From Beverly Chandler, Opalesque London:

Lionel Melka, chief investment officer of Bernheim Dreyfus, managers of the US$ 160m Diva Synergy fund, believes that iconic luxury store Tiffany & Co is ripe for takeover in 2011. "We think there is a strong momentum in the luxury sector" he says. "Stocks rose a lot last year because the crisis is over in the luxury world with strong growth in Asia. LVMH's share price rose from Eur40 to Eur120 in just over one year to end December 2010."

Bernheim Dreyfus uses two strategies to deploy capital in the event driven space. Firstly, they use classic merger arbitrage techniques and secondly they look for pre-event or special situations where they can try to anticipate potential deals and identify targets.

"There is a lot of confidence in the luxury groups and Tiffany's has one of the greatest brands in the industry. They want to expand and we believe that while it is a company that has a lot of assets in the brand and the network of stores, it is probably undermanaged. It has great value by itself but a greater one in a larger luxury group."

Another area where Melka expects a boom in takeover activities is the health and pharmaceutical sector. "You have a lot of very large pharma groups with a lot of cash that are facing key strategic issues such as patents expiration combined with biotech companies that are looking for funding and distribution."

As an example, Me......................

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