LVMH to buy Tiffany for $15.8B, shaving $400M off the price

Dive Brief:

LVMH Moët Hennessy Louis Vuitton and Tiffany & Co. on Thursday announced in a joint press release that they've agreed that LVMH will purchase the American jeweler for $131.5 per share in cash. The $15.8 billion price tag is $400 million less than the $135 per share in cash or $16.2 billion that the companies had agreed to late last year.
The companies said they've settled their pending litigation, dueling lawsuits in the Delaware Chancery Court, initiated by Tiffany in September when the Parisian conglomerate sought to back out of their deal.
They also said they have "all required regulatory approvals" for the deal, which aside from the lower price remains unchanged and is expected to close early next year.

Dive Insight:

There has been a lot of drama surrounding this agreement in the months since it was first forged. Last year the tie-up had been touted by the companies and several analysts as a boon for both.

The pandemic seems to have been a catalyst for the breakdown of the deal. When LVMH first balked at following through on it, the company cited Tiffany's extension of the "outside" date to finalize it and a notice from the French government purportedly warning against it (later refuted by the official involved, who said that LVMH had actually solicited the letter). LVMH also later criticized Tiffany's business management and financial performance in light of the pandemic.

Tiffany revenue in the first half of the year fell 37% while sales at LVMH's watch and jewelry business fell 38% in a comparable period.

That LVMH continued to seek regulatory approvals for the deal suggested to some observers that it remained interested. In the end, this purchase price is above its first proffer. Last year LVMH had to sweeten its offer before Tiffany would agree to be acquired, and this latest price remains above its original bid. Credit Suisse analyst Michael Binetti in a client note on Wednesday called the final price a "slight cut," and Tiffany board chair Roger Farah in a statement Thursday called it "an attractive price."

LVMH CEO Bernard Arnault, who called the agreement "balanced," has returned to his previous level of enthusiasm for it. "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," he said in a statement on Thursday.