LVMH keeps deal intact, agrees to buy Tiffany at a discount
Bloomberg
NEW YORK: LVMH agreed to buy Tiffany & Co. at a slightly reduced price of almost $16 billion, preserving the luxury industry’s biggest takeover and avoiding a courtroom battle over an earlier deal that soured.
The compromise ends a yearlong saga characterised by accusations of bad faith, French government intervention and lawsuits. Both sides were due to meet in a Delaware court in January, after the Louis Vuitton owner walked away from their original agreement and Tiffany sued to keep it on track.
Adding Tiffany at a lower price reinforces LVMH chairman Bernard Arnault’s image as a hard-nosed bargainer, even though the savings—roughly $425 million—are a small fraction of his company’s $240 billion market value. The deal gives LVMH a major boost in the global jewelry market, adding a famous brand that can compete with Richemont’s Cartier.
Under the new accord, the French owner of brands like Dior fashions and Hennessy cognac will pay $131.50 a share, down from the original price of $135, according to a statement Thursday.
LVMH rose as much as 0.6% in Paris. Tiffany traded at $130.50 in pre-market US trading Thursday.
The reduction in the price follows Tiffany’s payment of dividends and management bonuses that angered LVMH. The payouts were made after the companies struck their first agreement in late 2019 and as the Covid-19 pandemic caused a slump in luxury sales.
Under the modified terms, Tiffany will pay its regular dividend of 58 cents per share in November, the companies said. That’s a win for Tiffany on a “point of principle,” said Luca Solca, an analyst at Sanford C. Bernstein. The new price is a reduction of only 2.6% from the original deal. Without a new agreement, analysts surveyed by Bloomberg saw the jeweller’s shares falling far more—to around $108, on average.