Tiffany & Co., which almost tripled its value selling engagement rings since the recession, may be a takeover target after ending an alliance with Swatch Group AG (UHR) and could hand investors an extra $3.4 billion in a deal.The world’s second-largest jewelry retailer boosted its market capitalization to $8.6 billion yesterday from $3.1 billion in June 2009 when the U.S. economy emerged from the longest contraction since the Great Depression, according to data compiled by Bloomberg. After Swatch this month terminated a 20-year watch partnership 16 years early, New York-based Tiffany may command as much as a 40 percent premium in an acquisition, or about $12 billion, said Fifth Third Asset Management.With the breakup of the Swatch deal removing an obstacle for a potential takeover, Tiffany may now lure interest from luxury retailers LVMH Moet Hennessy Louis Vuitton SA (MC) and Cie. Financiere Richemont SA, according to Merriman Capital Inc. and Caris & Co. While an acquisition of Tiffany would be twice as large as the biggest purchase of a jewelry retailer, analysts project revenue will increase more than 30 percent in the next two years as the company garners the majority of sales from outside the U.S. by opening more stores in Asia and Europe.“To get possession of Tiffany’s assets somebody’s going to have to pony up,” Matt Arnold, an analyst for St. Louis-based Edward Jones & Co., said in a telephone interview. “Their forays overseas have been stunning. Tiffany’s global brand strength is what makes this thing special, hands down.”Mark Aaron, a spokesman for Tiffany, said the company doesn’t comment on rumors or speculation. Olivier Labesse, a spokesman for LVMH, declined to comment regarding a potential acquisition of Tiffany. Alan Grieve, director of corporate affairs at Richemont, couldn’t be reached for comment.Tiffany climbed as much as 3.2 percent today and was up 1.6 percent to $68.55 at 10:26 a.m. in New York.Swatch, the biggest maker of Swiss watches, canceled a profit-sharing alliance dating back to December 2007 to develop, produce and sell Tiffany brand watches, according to statements from the companies Sept. 12. Biel, Switzerland-based Swatch said Tiffany blocked development of the business, while Tiffany said its brand management and product design rights were impeded.“With the joint venture with Swatch breaking up, that removes something that was seen as an obstacle for a takeover with Tiffany,” Jon Cox, a Zurich-based analyst for Kepler Capital Markets, said in a telephone interview. “If someone like a Richemont, another watch company, wanted to take over Tiffany’s, that would have caused complications.”Tiffany’s shares surged 166 percent to $67.47 through yesterday since the 18-month recession ended in June 2009, giving it a market value of $8.6 billion as of yesterday. That’s triple the 53 percent advance for the Standard & Poor’s 500 Consumer Discretionary Index and more than seven times the 23 percent increase for the S&P 500 during the same period, data compiled by Bloomberg show.The company’s market value had more than tripled to $9.7 billion as of Sept. 19 before the stock fell 11 percent in the three days through yesterday.Tiffany’s shares have gained post-recession as Chief Executive Officer Michael Kowalski opened new stores in the Asia-Pacific region and Europe. He also introduced the company’s first handbag collection in 20 years, a line of yellow diamonds and men’s briefcases, purses, wallets and business-card holders. Sales are projected to climb to record levels this year and next, surpassing $4 billion for the first time in the 12 months ending in January 2013.Investors in Tiffany would likely seek a 30 percent to 40 percent premium in a takeover, Keith Wirtz, who oversees $16.7 billion including about 60,000 shares of Tiffany as chief investment officer at Fifth Third, said in a phone interview from Cincinnati.Based on yesterday’s closing price, that would equate to a bid of about $88 to $94 a share, valuing the company at as much as $12 billion.“Shareholders are going to be looking for a premium,” Wirtz said. “That’s well within reach of some of the larger players that may find Tiffany an attractive brand to own.Acquisitions of jewelry retailers greater than $250 million since 1999 have commanded an average premium of 31 percent and a median of 16 times earnings before interest, taxes, depreciation and amortization, according to data compiled by Bloomberg. Applying that premium and Ebitda multiple, Tiffany’s equity may fetch a takeover bid of $11.2 billion to $12.7 billion.“This is a smart management team that has been very successful in making the stock price appreciate over time,” said Edward Jones’s Arnold. “They’re going to expect top dollar.”A buyout of Tiffany would be the biggest deal in the industry in at least a decade, surpassing LVMH’s pending purchase of Bulgari SpA, the Rome-based watch and jewelry maker, for 3.7 billion euros ($5.2 billion).Still, a slowing economy may deter potential acquirers of Tiffany, which sells everything from $200 necklaces to $470,000 bracelets, as consumers tighten spending on jewelry and other items that aren’t seen as necessities, said Jennifer Milan, a New York-based analyst at Sterne Agee & Leach Inc.“Their consumer is very tied to their net worth,” Milan said. “If the market started to press and they see their net worth declining, they’re going to be less inclined to spend money at Tiffany, so that obviously is a concern.”The S&P 500, the benchmark for American equities, has slipped 16 percent in the last two months amid concern the worsening European sovereign debt crisis will help send the economy back into a recession.LVMH’s track record of taking stakes in other luxury brands makes the world’s largest luxury-goods maker a likely buyer for Tiffany, Dorothy Lakner, a New York-based analyst for Caris, wrote in an e-mail. In addition to its Bulgari purchase, Paris- based LVMH has built what is now more than a 21 percent stake in birkin-bag maker Hermes International (RMS) SCA.“A company like LVMH certainly has funding and might be interested,” Sterne Agee’s Milan said. “Tiffany has very, very high brand equity. They have a growing global diversification.”Richemont, which gets about a quarter of its income from specialist watchmakers, may also be interested in Tiffany, according to Kristine Koerber, a New York-based analyst for Merriman Capital.Richemont, the Geneva-based company that sells Cartier watches and Jaeger-LeCoultre timepieces, prefers to invest in its existing businesses, CEO Johann Rupert said Sept. 7 when asked about the company’s interest in making more acquisitions.Tiffany will soon generate the majority of sales outside the U.S. as it opens more stores in Europe, Agnes Cromback, the head of the company’s French unit, said in an interview last week. The retailer had 31 locations in Europe as of July 31 and plans to double its properties in China to 30 within the next few years. The company generated 62 percent of revenue domestically in the year ended January 2007, a portion that dropped to 51 percent last year.“Right now China is their biggest success story,” said Edward Jones’s Arnold. “If you want to talk about a place where there’s a lot of people that are emerging as affluent all of a sudden, China’s just a stunning market for that. Tiffany has a brand that works there.”