LVMH explores impact of coronavirus on Tiffany deal terms
Louis Vuitton owner LVMH has moved to dispel speculation that its acquisition of jewellery brand Tiffany & Co is on the brink of collapse, but confirmed that it has discussed the impact of coronavirus on the deal.
LVMH agreed to buy Tiffany last year for $16.2bn. However, LVMH has reportedly been planning to try and negotiate a cheaper price due to the impact of coronavirus.
The company said this morning that it is not considering buying Tiffany shares on the open market, which would have been a way to buy the firm at a reduced price.
The luxury goods giant confirmed it met on Tuesday to discuss the deal.
“The board of directors of LVMH met on Tuesday, 2 June 2020 and notably 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,” the company said.
“Considering the recent market rumors, LVMH confirms, on this occasion, that it is not considering buying Tiffany shares on the market.”
LVMH’s statement this morning came after reports that it was exploring ways to reopen negotiations and potentially pressure Tiffany to lower the agreed deal price of $135 per share.
Tiffany is preparing to release quarterly earnings on 9 June which had originally been scheduled for this Friday.
It was not clear what strategy LVMH might pursue to secure a price cut and whether it would see it through, Reuters reported, citing sources.
However, one way into a renegotiation would be if Tiffany breached its financial covenants under the deal.