French luxury goods industry titan Bernard Arnault has been rethought his $ 16 billion deal for jewelry store Tiffany & Co after the coronavirus pandemic plunged the industry.
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Arnault called a board meeting of the luxury goods company he controlled, LVMH, on Tuesday to discuss the purchase of the US company, an informed person said.
LVMH Moët Hennessy Louis Vuitton SE confirmed the meeting and said the board “was particularly attentive to the development of the pandemic and its potential impact on the results and prospects of Tiffany & Co.” directed.
LVMH paid $ 135 per share for the takeover of the jewelry store in November, a price that was close to the record high of the share price. A few months later, the outbreak of the corona virus caused the luxury goods market to collapse, and recent protests against police violence in the United States, which resulted in looting and vandalism in expensive shopping areas, should give Arnault even more reason to question the transaction, analysts say.
Arnault will likely be looking for ways to renegotiate the high price he pays for Tiffany, the analysts said. According to the merger agreement, Tiffany can step out of the deal for $ 575 million, but LVMH doesn’t have that option. “If you want to get out, go to court,” said Bernstein luxury goods analyst Luca Solca.
Tiffany announced on Tuesday the figures for the business quarter to the end of April, a period in which the blockade measures in China and the West to combat the pandemic fall. Analysts expect sales to decline by around 50 percent.
LVMH paper fell 0.86 percent on Thursday in Parisian trade to € 390.05, while Tiffany paper on the NYSE rose slightly by 0.25 percent to $ 114.53.
By Pietro Lombardi
PARIS (Dow Jones)
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