LVMH and Tiffany’s $16.6bn soap opera
We told you it was always a price negotiation.
But like any good telenovela, the twists and turns of LVMH and Tiffany’s rocky engagement were irresistible to watch, no matter how predictable.
For months, we’ve been chronicling the fate of the French luxury conglomerate’s planned takeover of the US jeweller. So to kick off today’s DD, we thought we’d try our hand at a mini screenplay on how the merger drama played out.
A wealthy patron (LVMH) falls for a diamond in the rough (Tiffany). The marriage is sealed after an intense courtship. Then, after all the documents are signed, the French luxury conglomerate begins to get cold feet.
Things begin to unravel alongside the global coronavirus pandemic, and grow nasty pretty quickly. Outside parties, including the French government, get involved. The international media seizes upon the threatened divorce. And now, just before a courtroom showdown, the two sides finally come to their senses. (End scene)
That’s where we find ourselves after DD’s James Fontanella-Khan and Arash Massoudi and the FT’s Leila Abboud reported that the two are on speaking terms again, exploring the possibility of renegotiating their $16.6bn deal to avoid a court battle in January.
LVMH boss Bernard Arnault, otherwise known as “the wolf in cashmere”, has been angling for a price cut on his initial offer of $135 a share in cash for the US jeweller since the pandemic struck. The drama climaxed last month when the French billionaire threatened to walk away from the deal altogether, citing supposed French government demands.
But the jilted Tiffany is willing to forgive and forget, according to DD’s sources, saying it will consider a revised price as long as it is above $130 a share, and LVMH will agree to close the deal without any further objections.
The French company says it is also open to discussing such terms. One person says the price will have to fall below $133 a share to sway the cashmere-clad Arnault back down the aisle.
Shares in Tiffany rallied nearly 5 per cent on the news, closing at $128.88.
Whether or not the nuptials are back on, the pair are unlikely to pop open the Moët & Chandon just yet.
Analysts have predicted sales in the luxury sector could drop as much as 30 per cent this year, although third-quarter sales from LVMH and Hermès showed glimmers of recovery driven by Asian and US shoppers.