Tiffany And LVMH Reportedly In Talks To Merge After All

The final deal may have a slightly reduced price.

By Martin Lerma 28/10/2020

The fashion community (and undoubtedly no shortage of investors) has watched the dramatic legal battle between Tiffany & Co. and LVMH unfold in recent months. And it looks like the drama may soon come to a hair-raising finale.

The heritage American jeweller and French luxury conglomerate are renegotiating the terms of their merger, according to a new report from CNBC. This new deal would have LVMH purchase Tiffany at US$130-$133 per share, a small but meaningful reduction from the originally agreed-upon US$135 per share acquisition price. Sources who spoke with CNBC claim the luxury giants are looking to finalise a deal as soon as possible.

LVMH, which owns Louis Vuitton and Christian Dior, made its bid to bring Tiffany & Co. into its stable of elite brands late last year. The US$16.2 billion deal marked the largest the luxury sector has ever seen and came across as an aggressive move to have a larger footprint in both the U.S. market and jewellery in general. However, things rapidly soured as the economic grip of the coronavirus pandemic took hold and LVMH attempted to back out of the merger.

This led Tiffany to sue LVMH at the beginning of September in the hopes of enforcing the established deal. At the time, Roger N. Farah, chairman of Tiffany’s board, said, “We regret having to take this action but LVMH has left us no choice but to commence litigation to protect our company and our shareholders. Tiffany is confident it has complied with all of its obligations under the Merger Agreement and is committed to completing the transaction on the terms agreed to last year. Tiffany expects the same of LVMH.”

A countersuit by LVMH followed later that month claiming that mismanagement and a significant reduction in revenue transformed Tiffany into a company the group did not agree to buy. This downturn, LVMH claimed, was aided by Tiffany & Co.’s payment of large dividends even as it posted losses.

But these new talks offer some hope that, legal posturing aside, the deal may go through after all. Tiffany & Co. received word from the European Commission that it has the necessary regulatory approvals for everything to go ahead. Tiffany shares jumped just shy of 5 percent on Tuesday to US$128.75 as word of the renegotiation made waves. If all continues in this direction, the jewel of American baubles may soon be part of a distinctly French crown.

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