French luxury conglomerate LVMH said it will not buy up shares of Tiffany & Co on the market in a bid to get a lower price for the American jeweler, as the company is seeking to renegotiate its $16.2 billion deal for the retailer hard hit by the coronavirus crisis.
The world’s most valuable luxury brand secured a deal to acquire Tiffany & Co in a deal that valued the company at $16.2 billion in November 2019.
But the biggest ever luxury deal now looks to be on the rocks as LVMH is reportedly seeking to lower the agreed price.
Sources close to negotiations told Reuters that LVMH CEO Bernard Arnault is now looking to convince Tiffany & Co to lower the price of $135 per share agreed in the deal.
LVMH discussed the takeover in a board meeting this week, with management said to be concerned about the coronavirus crisis, the economic fallout and unrest in the U.S. weighing on consumer demand for luxury goods.
LVMH is reportedly concerned about Tiffany’s ability to repay its debt obligations.
The luxury conglomerate, owned by billionaire Arnault, said in a statement on Thursday: “Considering the recent market rumours, LVMH confirms, on this occasion, that it is not considering buying Tiffany shares on the market.”
LVMH’s acquisition was seen as yet another bid for the conglomerate to strengthen its foothold in the U.S. But the deal, which was expected to close mid-2020, is likely to be reconsidered. Tiffany shares plunged 9% on Tuesday after a WWD report suggested the luxury conglomerate was considering backing out of the $16.2 billion deal in pursuit of a cheaper price. November’s deal followed weeks of negotiations between Arnault and Tiffany’s, after Arnault initially made a bid of $120 per share.
What to watch for
Tiffany’s Q1 results are out on Friday.
Merger and acquisition deals have slowed dramatically amid the coronavirus crisis, which has forced businesses to close and focus on staying afloat.
M&A Activity Plunges, It Could Get Much Worse As Coronavirus Hits Markets And Prevents Face-To-Face Meetings (Forbes)
Louis Vuitton Owner LVMH Buys Tiffany For $16.2 Billion (Forbes)
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