Proposed £12.7bn takeover of Tiffany by owner of Louis Vuitton thrown into doubt by coronavirus pandemic
The proposed £12.7billion takeover of Tiffany by the owner of Louis Vuitton has been thrown into doubt by the Covid-19 pandemic.
LVMH, which already owns 75 brands including Moet & Chandon and Christian Dior, agreed to buy the US jewellery chain in November.
But the deal has not yet been completed and LVMH is thought to be looking to renegotiate after the coronavirus outbreak and social unrest in America hit Tiffany sales. Rumours have been swirling that LVMH chief executive Bernard Arnault, France’s richest man, would pull out of the deal altogether or seek to lower the price.
Losing its sparkle: LVMH is thought to be looking to renegotiate after the coronavirus outbreak and social unrest in America hit Tiffany sales
Having seen Tiffany shares fall well below the agreed $135 sale price to around $114, it was thought LVMH might start buying stock on the open market, handing it a slice of the company on the cheap.
But LVMH said it would not do this – though it refused to elaborate on its plans further. LVMH said a board meeting on Tuesday ‘notably focused its attention on the development of the pandemic and its potential impact on the results and perspectives of Tiffany with respect to the agreement that links the two groups’.
It was not clear what strategy LVMH might pursue to secure a price cut, but one way into a renegotiation would be if Tiffany breached its financial covenants under the deal. LVMH has not yet asked Tiffany to reopen talks.
Tiffany’s New-York listed shares are likely to remain under pressure if investors believe a cut-price deal could be struck behind closed doors.