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LVMH, Tiffany romance back on after rocky engagement

Wedding bells rang again Thursday, October 29, in the on-off romance between LVMH and Tiffany, with an announcement that the French luxury giant and high-end jeweler finally plan to tie the knot at a substantially lower price.

The glittering tie-up was originally unveiled at the end of 2019, when LVMH – which owns luxury brands such as Louis Vuitton, Dior, and Moet & Chandon – said it would take over the jeweler for $135 per share.

However, the deal quickly lost its shine and broke down in acrimony, and LVHM walked away from its proposal last month, pointing to what it described as a series of poor decisions by Tiffany's board since the purchase was announced. 

Tiffany dismissed the charges and said there was no valid basis to call off the deal. 

It lodged a complaint in a Delaware court and LVMH responded with a counterclaim.

The US court has set a trial date of January 5, 2021, while a judge has called for talks between the parties to avoid litigation.

On Thursday, the nuptials were back on after Tiffany agreed to accept a lower price from LVMH, the French group announced.

"LVMH, the world's leading luxury products group, and Tiffany, the global luxury jeweler, today announced that they have concluded an agreement modifying certain terms of their initial agreement to reflect a purchase price of $131.50 (per share) in cash and to reduce closing conditionality," the statement said.

"Other key terms of the merger agreement remain unchanged."

'Formidable potential'

At the revised share price, the deal is worth around $15.77 billion, down from $16.2 billion initially.

"This balanced agreement with Tiffany's board allows LVMH to work on the Tiffany acquisition with confidence and resume discussions with Tiffany's management on the integration details," said LVMH chief executive Bernard Arnault.

"We are as convinced as ever of the formidable potential of the Tiffany brand and believe that LVMH is the right home for Tiffany and its employees during this exciting next chapter."

Tiffany's board chairman Roger Farah said: "We are very pleased to have reached an agreement with LVMH at an attractive price and to now be able to proceed with the merger. The board concluded it was in the best interests of all of our stakeholders to achieve certainty of closing."

The different competition authorities involved, such as the European Commission in Brussels, have already given the deal their blessing, so it is expected to be finalized in January. 

"It remains a very attractive acquisition, even if the coronavirus pandemic has robbed it of some of its sparkle," said Arnaud Cadart, asset manager at Flornoy.

"Tiffany, currently in full lockdown, has a strong pair of shoulders to lean on in LVMH with its long-term perspective." – Rappler.com