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LVMH-Tiffany Deal Faces Uncertainty

Jun 4, 2020 7:46 AM   By Rapaport News
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RAPAPORT... The LVMH board met on Tuesday to discuss its takeover of Tiffany & Co., fueling rumors that the $16.2 billion deal was less certain than before Covid-19.

The panel of directors “focused its attention on the development of the pandemic and its potential impact on the results and perspectives of Tiffany & Co. with respect to the agreement that links the two groups,” LVMH said in a brief statement Thursday.

LVMH agreed in November to buy the New York-based jeweler for $135 per share. However, Tiffany’s stock fell to just under $130 as of June 1, and has since slumped to $114 following a report on Tuesday by Women’s Wear Daily that the deal was under threat.

The European luxury group’s board is worried about the effects of the coronavirus and social unrest on Tiffany’s important US business, according to the report, which cited unnamed sources. Directors also expressed concerns about Tiffany’s ability to cover all its debt covenants by the time the transaction closed, which was due to happen in mid-2020, it continued.

Meanwhile, Bernard Arnault, LVMH’s CEO and chairman, is exploring ways of pressuring Tiffany to lower the selling price, Reuters reported Wednesday.

“We do believe the transaction will occur, but a lower price may or may not be possible,” US investment bank Cowen said in a research note Wednesday. “We remain confident that this is a great long-term transaction and will have many synergies.”

LVMH also said it was not considering buying cheap Tiffany stock on the open market to benefit from the reduced share price.

Image: A Tiffany store in Toronto. (Shutterstock)
Tags: Bernard Arnault, Coronavirus, COVID-19, Jewelry, LVMH, new york, pandemic, Rapaport News, retail, Tiffany, Tiffany & CO., US, Women’s Wear Daily
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