LVMH wants to renegotiate Tiffany deal

It is looking increasingly unlikely that LVMH will pay the agreed sum of 16.2 billion dollars for American jeweller Tiffany & Co. The French luxury group wants to get out of the deal or arrive at a lower takeover fee.

Shares drop

A short statement released by LVMH says that “ it is not considering buying Tiffany shares on the market“, Fashion Network writes. The jeweller’s shares have dropped to 114 dollars (100 euros), way below the price of 135 dollars (120 euros) that was agreed late last year.

Tiffany & Co’s shares dropped suddenly after an article in fashion magazine WWD, exposing the doubts LVMH’s owner Bernard Arnault had about the high price he would have to pay for the American jeweller. His reasons, most importantly the damage the coronavirus crisis caused to the luxury sector, were put on the agenda of Tuesday’s management meeting.

Speculation

It remains unclear what exactly LVMH wanted to achieve with this statement, which at the same time seems to suggest the planned acquisition is still happening – and remaining deliberately vague about actually respecting the original deal.

After the statement, analysts have started speculating that LVMH has deliberately leaked its hesitance regarding the takeover to WWD, with the goal to force down Tiffany & Co’s share price in the open market. As it has indeed gone down, Arnault is now in a much better position to renegotiate the takeover price…