LVMH wins $ 400 million discount on Tiffany deal after legal dispute

LVMH wins $ 400 million discount on Tiffany deal after legal dispute

The New York jeweler agreed to accept a lower purchase price from the French group, ending a dramatic controversy that had threatened to derail $ 16 billion ransom.

The companies said in a joint statement Thursday that they had amended the terms of last year’s merger agreement, reducing the price per share that LVMH will pay from $ 135 to $ 131.50. The move is now worth Tiffany at $ 15.8 billion, $ 400 million less than the originally agreed $ 16.2 billion. A legal battle for the agreement is also coming to an end.

LVMH was announced in September that it will abandon the planned acquisition of Tiffany, which was expected to be the largest luxury goods deal in history. LVMH said a trade dispute between Brussels and Washington forced it to cancel the deal, but some analysts believed the move was an attempt to renegotiate the sale.
Tiffany argued that the decision had no legal grounds. The sued LVMH in a Delaware court, saying the French group had breached its obligations and had to proceed with the merger.
Weeks later, LVMH faced, arguing that the Koranic pandemic had severely damaged the U.S. jewelry business and had “catastrophic and lasting” effects.

The deal is expected to help LVMH better compete with rival Swiss jewelry retailer Richemont, strengthening its position in watches and jewelry. So far, this has been LVMH ‘s “weakest division” by some measurements, according to Luca Solca, a senior luxury analyst at Bernstein. It would also help the company strengthen its presence in the United States.

Bernard Arnault, CEO of the LVMH billionaire, described the new deal as “balanced” and said it “allows LVMH to work confidently in the acquisition of Tiffany”.

“We are as confident as ever about the huge potential of the Tiffany brand and we believe that LVMH is the right home for Tiffany and her employees,” he added.

Chinese buyers are hoping for luxury brands

The deal, which must be approved by Tiffany shareholders, is expected to be completed early next year.

“We are very pleased to have reached an agreement with LVMH at an attractive price and we can now proceed with the merger,” Riffer Farah, Tiffany’s president, said in a statement on Thursday. “The board concluded that it was in the interest of all our stakeholders to achieve a certainty of closure.”

Solka said the news sent a “very good message to the industry” – he reassured [people of] the trust that large teams have in the business. ”

“The LVMH and Tiffany saga seems to be over,” he added.

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