Wall Street

LVMH acquires Tiffany & Co

Summary

Tiffany sues LVMH for pulling out of $16.2 billion deal Description video: Louis Vuitton owner LVMH is scrapping its $16.2 billion acquisition of Tiffany, a deal that would have been the biggest ever in the luxury industry. The Wall Street […]

Tiffany sues LVMH for pulling out of $16.2 billion deal

Description video:
Louis Vuitton owner LVMH is scrapping its $16.2 billion acquisition of Tiffany, a deal that would have been the biggest ever in the luxury industry. The Wall Street Journal reported that the U.S. jewelry seller has filed a lawsuit in Delaware to enforce the agreement. CNBC’s David Faber reports the latest on the developing story. For access to live and exclusive video from CNBC subscribe to CNBC PRO: https://cnb.cx/2NGeIvi \n\nLouis Vuitton owner LVMH is scrapping its $16.2 billion acquisition of Tiffany, a deal that would have been the biggest ever in the luxury industry. \n\nThe luxury-goods giant said Wednesday the merger agreement signed last November provides for a closing deadline no later than Nov. 24, 2020. But Tiffany had requested to extend the date to Dec. 31, and the French minister of foreign affairs had directed the company to defer the deal until after Jan. 6 due to a U.S. threat of taxes on French goods. \n\nThe company said in a statement that it will not be able to complete the acquisition of Tiffany “as it stands.” It said it needs additional time to figure out any impact from potential U.S. tariffs on French goods, and therefore can’t close the deal before the end of the year. \n\nTiffany shares tumbled 10% in early trading Wednesday. Tiffany shares, which have a market value of $14.8 billion, have fallen nearly 9% this year. \n\nA representative for Tiffany did not respond to a CNBC request for comment. The Wall Street Journal reported that the U.S. jewelry chain has filed a lawsuit in Delaware to enforce the agreement, saying the request from the French government has no basis in law. \n\nThe coronavirus pandemic has hit the luxury retail sector hard, sending Tiffany’s same-store sales down 44% and throwing the LVMH deal into doubt. Investors worried whether the French company overpaid, and LVMH CEO Bernard Arnault was looking to lower the price of buying the U.S. jewelry chain, according to people familiar with the matter. \n\nAmid the turmoil, LVMH and Tiffany had agreed to push back an initial deadline from Aug. 24 to Nov. 24, as talks started to sour. \n\nAnalysts had said they believed the transaction was still going to go through, but at a lower price. \n\nWith international tourism seemingly dragged to a halt, Tiffany’s and other luxury retailers’ businesses have been battered, as many relied on big spenders from China venturing to their flagship shops in the U.S. to splurge on handbags and diamonds. In buying Tiffany, LVMH had been looking to grow its jewelry business, which had been one of the hottest and fastest-growing categories in luxury until the pandemic hit. \n\nAt the time of Tiffany’s earnings report in early June, the company was still waiting to clear key regulatory hurdles for the deal. \n\nSome other retail-related deals have been called off because of the pandemic. \n\nThe biggest U.S. mall owner Simon Property Group has terminated its deal to buy the high-end mall owner Taubman, prompting Taubman to file a counterclaim against Simon’s accusations. The private-equity firm Sycamore also backed out of its deal to take over Victoria’s Secret from L Brands. \n\nSubscribe to CNBC PRO for access to investor and analyst insights on Netflix and more: https://cnb.cx/3dIH56N\n\n» Subscribe to CNBC TV: https://cnb.cx/SubscribeCNBCtelevision\n» Subscribe to CNBC: https://cnb.cx/SubscribeCNBC\n» Subscribe to CNBC Classic: https://cnb.cx/SubscribeCNBCclassic\n \nTurn to CNBC TV for the latest stock market news and analysis. From market futures to live price updates CNBC is the leader in business news worldwide.\n \nConnect with CNBC News Online\nGet the latest news: http://www.cnbc.com/\nFollow CNBC on LinkedIn: https://cnb.cx/LinkedInCNBC\nFollow CNBC News on Facebook: https://cnb.cx/LikeCNBC\nFollow CNBC News on Twitter: https://cnb.cx/FollowCNBC\nFollow CNBC News on Instagram: https://cnb.cx/InstagramCNBC\n \nFor info on the best credit cards go to CNBC Select: \nhttps://www.cnbc.com/select/best-credit-cards/ \n\n#CNBC\n#CNBCTV

LVMH acquires Tiffany & Co

LVMH agreed to buy Tiffany & Co. for 16.2 billion. This will expand the company’s capabilities when expanding into the American premium goods market.

LVMH acquires Tiffany & Co

The cash deal at $ 135 a share will boost LVMH’s smallest business, the jewelry and watches division. The acquisition of Tiffany will strengthen their position in the jewelry business and further increase its presence in the United States, the company said..

LVMH CEO Berno Arnault said the company intends to develop the acquired brand with the same dedication that has been applied to its own brand..

LVMH shares up 1.4% after announcement of purchase.

LVMH has built a large portfolio of luxury brands across a variety of retail sectors, from fashion to perfume. Some of his famous labels include Moët & Chandon, Dom Perignon, Givenchy and Louis Vuitton.

LVMH and Tiffany Board of Directors approved the deal on Sunday, expected to close in mid-2020, subject to agreement by shareholders and regulatory approvals.

Tiffany was founded in New York in 1837 and became an iconic jewelry brand in the 20th century. However, the trading house is going through drop in annual sales and profits since 2015. The jewelry house also began expansion into China, but experienced a decline in US and Asian sales from the US-China trade war.

LVMH has increased its application for Tiffany’s acquisition of an initial $ 120 per share offer made in October. The offer was rejected by the company, which considered its too underrated. 

«The Tiffany brand has weakened slightly over the past few years, and LVMH has a long history of helping development internationally. They proved it with Bulgari — it was not an easy acquisition at the time and they have managed to grow the brand a lot over the past few years», – reported by Tiffany representatives & Co.

The growth of the jewelry market has outpaced the progress of other companies such as fashion in 2018. According to consulting firm Bain & Co, forecast of comparable sales in the global jewelry market will be $ 20 billion.