LVMH renounces negotiations on the purchase price of Tiffany

  •   08/06/2020 - 11h50
  •   DEHOUI Lionel

This week has been very rich in information. While some companies delivered their balance sheet for the first quarter, others are focusing on how to recover from the ravages of the Covid-19 health crisis. But there are still those that have had to deal with several purchasing operations. Among the latter is the giant French group LVMH which is making a renunciation according to some not insignificant sources. Indeed, this Friday, sources close to a file of acquisition between the French group LVMH and the American company Tiffany made certain revelations. According to them, LVMH will no longer ultimately seek to negotiate the cost of acquiring the Tiffany group. Last November, the amount of this acquisition transaction was set at $16.2 billion. In euros, this corresponds to 14.3 billion. This is the moment to recall that LVMH was considering making this acquisition.

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LVMH renounces negotiations on the purchase price of Tiffany

Reasons for the renunciation

According to information, the chairman and CEO of the giant French luxury goods company has had discussions with his various advisers. Let us recall that it is the businessman Bernard Arnault who is the CEO of the luxury group. The discussion took place this week and focused on the possibility of operating the said acquisition according to Wednesday's releases. In addition, it is certain concerns that led LVMH to renounce this share buyback.

The French group was wondering whether it would reconsider the breaches of certain obligations shown by Tiffany in the agreement. It is clear, therefore, that in this case the agreement was intended to merge the two partners. According to the sources, this partnership will no longer take place finally because of the French side which has decided not to continue the negotiations. The marriage of LVMH with the American jeweller will therefore no longer take place.


The level of the file and the attitude of the groups

According to sources close to the file, the luxury giant avoided raising the subject because of legal difficulties. The latter may well succeed in obstructing the evolution of the initiative according to the sources. However, the transaction will still need to receive certain necessary and regulatory approvals. However, no one knows whether LVMH will reconsider the matter before it materializes.

This reconsideration could well take place if Tiffany's financial conditions deteriorate significantly. On the other hand, the two groups cited in the agreement are not immediately responsive in this case. They remain silent to the various requests for comments. While the situation remains thus between the two, it is not identical for each of them within their different stock exchanges.


LVMH and Tiffany up this Friday

On the French capital stock exchange, LVMH shares experienced a very brief reduction in earnings due to information about the acquisition. But it very quickly went up again by climbing to 2.81% around 3:15 pm this Friday. This corresponds to a total of 401 euros.

Even though Tiffany's on the New York Stock Exchange, he's still looking the same. It appreciated sharply, rising 9.1% to $125 (pre-exchange). Thanks to this progression, the American company thus erases the losses recorded throughout the week which ends thus.