Iconic jeweler Tiffany & Co. has agreed to a lower takeover offer of $15.8 million from French luxury goods giant LVMH, putting the largest deal in luxury back on the table.
LVMH will now pay $131.50 for each Tiffany share, down slightly from the $135 price when the deal was first agreed last November.
This puts the total price tag for New York’s famed jeweler at $15.8 billion, saving LVMH CEO and one of the richest men in the world Bernard Arnault $400 million on the $16.2 billion that was first offered.
The deal had been on the brink of collapse after LVMH threatened to pull out last month citing Tiffany’s ‘poor performance’ during the pandemic, sparking a bitter spat between the two companies that included the jeweler suing the French conglomerate in a Delaware court.
Iconic jeweler Tiffany & Co. has agreed to a lower takeover offer of $15.8 million from French luxury goods giant LVMH, putting the largest deal in luxury back on the table
The companies announced the modified deal had been reached in a joint statement Thursday, also bringing to an end the legal battle between the two parties.
‘We are as convinced as ever of the formidable potential of the Tiffany brand and believe that LVMH is the right home for Tiffany,’ Arnault said in the statement.
Roger Farah, the chairman of Tiffany, said the jeweler was satisfied with the ‘attractive price’.
‘We are very pleased to have reached an agreement with LVMH at an attractive price and to now be able to proceed with the merger,’ he said Roger Farah.
‘The board concluded it was in the best interests of all of our stakeholders to achieve certainty of closing.’
The buyout has been approved by the boards of both companies, but must now be approved by Tiffany shareholders.
It is expected to close early next year.
Rumors that the two luxury companies had rekindled talks began to surface in recent days.
Tiffany shares jumped nearly 5 percent Tuesday to about $128.75 off the back of the rumors.
They rose again Thursday morning off the back of the news of the deal, reaching a high of $130.85.
LVMH will now pay $131.50 for each Tiffany share, down slightly from the $135 price when the deal was first agreed last November. Pictured LVMH CEO Bernard Arnault in 2019
Tiffany shares rose Thursday morning off the back of the news
Thursday’s announcement brings to an end the ongoing saga between the two companies since LVMH, the parent company of luxury brands including Louis Vuitton, Dior and Moet & Chandon, announced its plan to acquire Tiffany at the end of 2019.
But LVMH appeared to walk away from the acquisition in September, which was on track to be the largest luxury goods deal in history.
It said the French government had pushed the French giant to delay the deal until January 2021 because of a trade fight between the EU and the US, with Washington threatening to hit $2.4 billion of French products with 100 percent tariffs.
The merger date had already been pushed back from the initial deadline of August 24.
The company also cited a series of poor decisions by Tiffany’s board since the deal was revealed as well as the jeweler’s ‘dismal’ performance during the coronavirus pandemic.
Thursday’s announcement brings to an end the ongoing saga between the two companies since LVMH, the parent company of luxury brands including Louis Vuitton, Dior and Moet & Chandon, announced its plan to acquire Tiffany at the end of 2019
LVMH threatened to pull out in September citing Tiffany’s ‘poor performance’ during the pandemic and trade issues. Tiffany sued LVMH in a Delaware court and the French giant counter-claimed. Pictured a Tiffany jeweler shop on the Champs Elysees avenue in Paris
Tiffany argued there was no reason to stall and sued LVMH in Delaware – where the US jeweler is registered – last month to enforce the merger agreement by November 24.
It claimed LVMH’s argument has no basis in French law and it hadn’t even attempted to seek the required antitrust approval from three jurisdictions, including the EU.
LVMH hit back saying it would counter-sue Tiffany, accusing it of mismanagement through the coronavirus crisis.
The US court set a trial date of January 5 2021, while a judge urged talks between the parties to avoid litigation.
But the tensions between the two parties seemed to shift, and there was pressure from investors on both sides to make a deal happen.
Tiffany, with its famed blue boxes, has in recent years attempted to regain the luster of the ‘Breakfast at Tiffany’s’ era as its customer base aged.
It’s shifted its focus to younger shoppers and made a significant push online.
The deep pockets of LVMH could go a long way in helping that transformation along.
LVMH, led by billionaire Arnault, a consumate dealmaker, believes Tiffany will strengthen its position in high-end jewelry and in the US market.
LVMH is also making a bet on China’s economy, where Tiffany has been expanding.