LVMH Set to Close Tiffany Acquisition This Week
The trip to the altar had many bumps along the way, but it looks like Tiffany & Co. and LVMH may finally get hitched this week.
On Dec. 30, Tiffany stockholders overwhelmingly approved the modified merger agreement that would give LVMH control of the storied retailer.
The revised deal, which was finalized on Oct. 29, is expected to close on Jan. 7, about six months after the original anticipated closing date.
The luxury giant paid $131.50 a share, or $15.8 billion, for the legendary jeweler—about 2.6% less than $16.2 billion, or $135 a share, the two sides originally agreed to in 2019.
The shareholder vote caps off a year during which it appeared the deal might be called off. According to a Dec. 28 Wall Street Journal article, once the severity of the COVID-19 pandemic became clear, LVMH chairman and CEO Bernard Arnault became furious that Tiffany was continuing to pay its regular shareholder dividend. He recruited a Rothschild & Co. banker to conduct back-channel negotiations, with the goal of lowering the original price by 11%, the newspaper reported.
When that failed, LVMH said that the French government, which was then engaged in a trade dispute with the Trump administration, had sent the company a letter saying it wanted the deal delayed until Jan. 6. Since that date fell outside the deal’s original time horizon, LVMH said the deal must be canceled.
Tiffany responded by filing suit in the Delaware Court of Chancery to have the deal enforced. In a statement, Tiffany chairman Roger Farah declared that LVMH had “unclean hands”—a phrase that “infuriated” Arnault and LVMH’s management, as it implied that the company “had asked the French government to write the letter,” the Journal said. (Later reports suggested this was true.)
In a counterclaim, LVMH asserted that COVID-19 represented a “material adverse event” that would negate the agreement.
Most, however, simply thought Arnault was angling for a lower price, as he had been from the beginning. Following an often bitter war of words, the two sides settled things in the boardroom, rather than the courtroom, leading to the revised deal.
Even with the price cut, this remains the priciest acquisition in LVMH’s history, more than doubling the $7 billion it paid for Christian Dior in 2017.