LVMH makes intriguing statement on Tiffany deal
Luxury group LVMH has confirmed that it will not try to buy Tiffany shares on the open market.
Tiffany’s share price has fallen since the two companies agreed LVMH’s acquisition of the New York-based jewellery and accessories brand in late November.
Buying shares on the market now rather than at the higher price agreed in the autumn would have been a way for LVMH to save money. On June 3, the Tiffany share price was 15% lower than the agreed price of $135 per Tiffany share. The two companies said at the time that they expected to close the deal in the middle of 2020.
Fashion media outlet Women’s Wear Daily (WWD) was the first to report that LVMH board members had called a meeting in Paris on June 2 to express concerns about the deal. WWD said LVMH board members’ concerns centred on the impact on Tiffany’s business of covid-19 and also of growing unrest in many US cities in late May and early June following the death of George Floyd in Minneapolis.
When the Financial Times picked up the early-June story, it said rumours of the deal being cancelled had sent shock-waves through the heady world of merger arbitrage management, largely because of a “mergers-and-acquisition famine” the market has experienced in recent months.
On June 4, LVMH issued a statement saying: “The board of directors of LVMH met on Tuesday, June 2, 2020, and focused its attention on the development of the pandemic and its potential impact on the results and perspectives of Tiffany & Co, with respect to the agreement that links the two groups. Considering the recent market rumours, LVMH confirms, on this occasion, that it is not considering buying Tiffany shares on the market.”
It gave no further detail.
