LVMH-Tiffany Mega Deal Facing Stranding Crisis... Acquisition Renegotiation Discussions

Tiffany Expresses Willingness to Renegotiate if Weekly Pay Exceeds $130

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kwon Jae-hee] LVMH (Louis Vuitton Mo?t Hennessy) and Tiffany & Co. have entered renegotiations for the acquisition. Earlier, LVMH showed signs of canceling the merger, citing instructions from the French government after Tiffany was hit hard by the impact of COVID-19. Tiffany filed a lawsuit claiming breach of contract against LVMH, but it is reported that this proposal was made to avoid a legal battle.

According to major foreign media including CNBC on the 27th (local time), Tiffany reportedly approached LVMH with an intention to renegotiate if the price is above $130 per share to avoid court disputes. LVMH also agreed to renegotiate under these conditions, and both parties are currently in talks.

Initially, LVMH planned to acquire Tiffany for $16.6 billion (approximately 19 trillion KRW) at $135 per share, drawing attention as the largest 'mega deal' in the luxury industry. However, as Tiffany was severely impacted by the COVID-19 pandemic, LVMH showed signs of canceling the merger, citing instructions from the French government.

Last month, LVMH stated, "We have received an order from the French government to postpone the acquisition of Tiffany until after January 6 next year," adding, "At this time, we cannot complete the acquisition."

When LVMH showed signs of canceling the acquisition agreement, Tiffany filed a lawsuit in the U.S. District Court for the District of Delaware. Tiffany argued that LVMH is using the French government as an exit strategy to back out of the acquisition and countered that "the French government's request has no legal basis."

According to sources, LVMH is reportedly seeking to acquire Tiffany at a price below $133 per share. It is expected that for every $1 decrease in the acquisition price per share, LVMH could save $120 million.

Meanwhile, Tiffany recorded a net profit of $262 million (approximately 1.541 trillion KRW) last year but posted a net loss of $33 million (approximately 39.1 billion KRW) this year.