LVMH’s takeover of Tiffany & Co has been thrown into doubt amid the global pandemic and the impact it has had on the consumer landscape in the US.
According to WWD, the multi-billion dollar deal may now be off the table.
The fashion business publication says LVMH met in Paris yesterday to discuss the proposed deal as executives are concerned about Covid-19 disrupting the US economy, alongside the social unrest of widespread protests in America’s largest cities.
LVMH board members are also reportedly concerned about Tiffany & Co’s ability to cover its debt covenants at the end of the transaction, which was expected to be concluded mid-year.
Sources have told WWD that no firm decision was made at Tuesday’s meeting, but board members made clear that the acquisition should be reconsidered,
Tiffany and LVMH have not yet responded reports. However, the news story along cost shares in the luxury American jewellery brand to plunge overnight.
Tiffany shares, which were halted for several minutes due to volatility, fell as much as 13%, the most intraday since 2015, before closing down 8.9% on Tuesday.
The economic fallout from the pandemic has disrupted or derailed a number of prominent deals, including L Brands Inc.’s agreement to sell a majority stake in Victoria’s Secret to private-equity firm Sycamore Partners.
If the LVMH takeover of Tiffany & Co falls apart, it would be one of the largest so far related to Covid-19.
LVMH’s deal to acquire Tiffany & Co was initially announced back in November, and involved the French luxury conglomerate paying $135 (£103) per share in cash to acquire the iconic jewellery brand.
The deal officially approved “overwhelmingly” by the jeweller’s shareholders in February.