Editor’s Note
After a year of negotiations and legal disputes, LVMH has finalized its acquisition of Tiffany & Co. for $13.5 billion, closing the deal at a 2.6% discount from the original offer.
The French luxury goods group and the American jeweler have agreed to the acquisition after a year of disagreements.
Finally, the marriage between the world’s largest luxury goods group and the planet’s most celebrated jewelry house will be consummated at a price slightly lower than the one agreed upon by the parties a year ago. After months of tug-of-war that even reached the courts, the French group LVMH, owner of brands such as Louis Vuitton, Bulgari, or Moët & Chandon, will acquire the American jeweler Tiffany by paying $131.5 per share in cash. This represents a 2.6% reduction from the $135 offered in November of last year when the deal was announced.
The offer values the jewelry company at just under $15.78 billion (just under €13.5 billion), compared to the $16.2 billion offered a year ago. The new price was accepted by Tiffany’s board of directors, giving the green light to a deal that already has the approval of the relevant competition authorities, including the EU’s, and which will be completed in early 2021 if the jeweler’s shareholders give their approval and no new problems arise. There have been problems in the months from November until this Thursday, to the point that the merger was on the verge of collapsing, with both parties accusing each other and litigating in a US court. The new agreement also means withdrawing the charges in court.
The legal battle was triggered in September when the French group, led by French billionaire Bernard Arnault, after a series of delays on the scheduled dates to complete the operation, announced that it was canceling the purchase due to a “succession of events” that had “weakened the transaction.” According to LVMH’s version, the French government requested the company to cancel the acquisition in response to a threat of tariff increases on French products by the US government.
The response of the legendary jeweler, whose icon is the Manhattan store immortalized in Breakfast at Tiffany’s, was to sue the French group in a Delaware (USA) court to force it to complete the operation. LVMH responded in turn with another lawsuit, wielding the coronavirus pandemic as an argument to break the agreement and accusing the jeweler’s leadership of mismanagement for paying too high a dividend while, due to the pandemic, its accounts were deteriorating.
The war between the two, however, did not last too long. This very week, the two sides announced that they were resuming talks, which materialized this Thursday with an agreement that, in summary, includes a timid price reduction.