French luxury goods company Louis Vuitton Moët Hennessy (FR:MC) struck a deal to purchase jewellery retailer Tiffany & Co (US:TIF) for $16.2bn (£12.5bn) last year. The takeover was approved by shareholders back in February and the tie-up was expected to complete this year.
But LVMH has now signalled a retreat, saying it is unable to go through with the acquisition. The original closing date for the merger was 24 November. Tiffany had requested to extend this to the end of December and LVMH says it has also been asked by the French government to delay the deal until January amid US threats to impose tariffs on French goods. LVMH says that because the deal cannot be completed in November, it has decided to walk away.
In what could turn out to be an acrimonious break-up – or the start of an unhappy marriage – Tiffany has filed a lawsuit against LVMH seeking to enforce the merger agreement. It’s little wonder that LVMH is trying to back out – it had been offering Tiffany shareholders $135 per share which now looks expensive given the Covid-19 blow to the luxury goods market. Tiffany is currently trading at $122.
