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LVMH moves to calm fears it will scrap $16bn Tiffany deal after jeweller’s stock tumbles

Mohit Oberoi
Author: Mohit Oberoi

Last Updated: June 4, 2020

The world’s biggest luxury goods firm, LVMH, that agreed to buy Tiffany for $16bn, said it will not buy the US jeweller’s stock on the open market on Thursday.

Paris-based LVMH agreed to acquire Tiffany last November, but coronavirus-induced turmoil on financial markets has overshadowed the deal, and saw the US firm’s stock plunge 11% this week.

Tiffany’s share price tumbled in March on the back of expectation that sales of its luxury jewellery would fall. Although the stock recovered, it fell again this week on speculation LVMH’s bid was in doubt, and that the French giant was buying up Tiffany stock in order to force the sale price down.

The board of the European furm added, “Considering the recent market rumours, LVMH confirms, on this occasion, that it is not considering buying Tiffany shares on the market.”

LVHM led by Bernard Arnault, Europe’s richest man agreed in November to acquire Tiffany, a brand given worldwide recognition in the 1961 film Breakfast at Tiffany’s starring Audrey Hepburn (pictured).   Berkshire Hathaway was approached for a part in the deal, but chairman Warren Buffett decided to pass.

LVHM agreed to acquire Tiffany at $135 per share. However, the share price has fallen amid the broad-based selling in stock markets. Tiffany is trading at just under $114 on Thursday morning. The company’s first-quarter earnings are scheduled for later this week. Tiffany’s share price is down 14% for the year.

Tiffany was founded in 1837 and employs over 14,000 people. It has around 300 stores globally and 12 of these are in the UK.

LVHM owns more than 70 luxury brands, such as Moet & Chandon champagne, Louis Vuitton luggage and Givenchy fashion. While Arnault has taken a $30 billion hit from the pandemic, he is plotting a comeback.

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Mohit Oberoi

Mohit Oberoi is a freelance finance writer based in India. he has completed his MBA with finance as majors and also holds a CFA charter. He has over 13 years of experience in financial markets. He has been writing extensively on global markets for the last six years and has written over 6,500 articles. He mainly covers metals, electric vehicles, asset managers, and other macroeconomic news. He also loves writing on personal finance and topics related to valuation.

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