LVMH and Tiffany & Co. finally agree on a lower acquisition price

U.S. jeweler Tiffany & Co. and French luxury goods group LVMH have finally agreed on the price of the acquisition deal after months of legal disputes, both companies said on Thursday.

The new acquisition price is now set at $131.5 per share compared to the $135 in the original deal, bringing the total amount to $15.8 billion. The companies said that other key terms of the deal remain unchanged.

“Tiffany and LVMH have also agreed to settle their pending litigation in the Delaware Chancery Court,” the two companies said in a statement.  

The new price at $15.8 billion gives Bernard Arnault, owner of LVMH with a discount of $425 million. The deal, which has been duly cleared by antitrust regulators is expected to close in early 2021 once Tiffany shareholders give their approval.

“We are as convinced as ever of the formidable potential of the Tiffany brand and believe that LVMH is the right home for Tiffany and its employees during this exciting next chapter,” said Arnault, in a statement.

Last month, LVMH announced scrapping its $16.2 billion acquisition deal with Tiffany, one that was on track to becoming the biggest in the luxury industry. All seemed to go well until the arrival of the coronavirus pandemic, which greatly impacted global economies and businesses and Arnault tried hard to find a way out of the deal.

Earlier this year, after LVMH shareholders agreed to the Tiffany acquisition deal, Bernard Arnault said the approval marked a significant milestone to moving closer to the goal. “Tiffany will be an outstanding addition to our unique portfolio of luxury brands. We look forward to welcoming Tiffany into the LVMH family and helping the brand reach new heights as an LVMH Maison.”

According to the luxury goods giant, the merger which was signed in November 2019 had a closing deadline no later than Nov. 24, 2020, but Tiffany requested to extend the deadline to Dec. 31. The French minister of foreign affairs was said to have directed LVMH to defer the deal until after January 6 due to tax threats of French goods by the United States.

“Involving the French government and its trade dispute with the United States takes this to a whole other level,” said shares M&A attorney Wilhelm E. Liebmann. “I’d be hard-pressed to say there has ever been anything like this that crosses the line from a corporate dispute to international geopolitics.”

At the time, LVMH said in a statement that it would not be able to continue with the deal until it was able to figure out if there’d be any impacts of the potential increased U.S. tariffs on French goods. Following the announcement, shares of Tiffany fell 10% in early trading.

The deal eventually became a legal drag as Tiffany reportedly filed a lawsuit against LVMH, in Delaware, to enforce the deal, saying the request from the French government had no basis to hinder the transaction.

Tiffany’s same-store sales were down 44% as the coronavirus pandemic affected sales causing LVMH to doubt the deal at the time. Investors grew worried that LVMH may be overpaying for the jewelry chain. Hence, Arnault sought ways to cut down the acquisition price of buying Tiffany, according to sources familiar with the matter. Analysts later predicted that the deal would continue but at a lower price.