LVMH and Tiffany 'are in talks' to settle $16 billion takeover 'for a lower price' after the luxury house tried to back out, accusing the jeweler of 'dismal performance' during the pandemic
U.S. jeweler Tiffany & Co and French luxury goods giant LVMH are in talks to settle their dispute over a $16 billion takeover at a price slightly lower than initially agreed, sources familiar with the matter said on Tuesday.
The negotiations were based on a price in the range of $131-$134 for each Tiffany share, against the $135 price when the deal was first agreed last November.
An agreement at the bottom of that range would save LVMH, led by billionaire businessman Bernard Arnault, about $480 million on the initial $16.2 billion purchase price.
The initial deal ran into trouble last month when the French group said it could no longer complete the transaction by the November 24 deadline.
The owner of brands such as Louis Vuitton, led by billionaire Bernard Arnault (above), is reportedly in talks with Tiffany & Co to settle their dispute over a $16 billion takeover
A Louis Vuitton store in Las Vegas is seen in a file photo. According to the merger agreement, a material adverse effect is triggered if Tiffany's business underperforms its peers substantially
The parent to luxury brands such as Louis Vuitton, Dior and Moet & Chandon, LVMH announced its plan to acquire Tiffany and it's iconic robin's egg blue gift boxes at the end of 2019.
But the French company walked away from its proposal last month after claiming a series of poor decisions by Tiffany's board since the deal was unveiled late last year. Tiffany has said there was no valid basis to call off the deal.
LVMH cited a French political intervention preventing it from doing so, but also what it described as the jeweler's 'dismal' performance during the coronavirus crisis.
The battle also has shifted to a Delaware court where Tiffany lodged a complaint and LVMH filed a counter-claim.
The US court has set a trial date of January 5, 2021, while a judge in Delaware has urged talks between the parties to avoid litigation.
CNBC earlier reported that the two parties were in indirect talks to settle the dispute.
The Tiffany & Co store on Bond Street, London is seen in a file photo. Tiffany has filed a lawsuit against LVMH in Delaware - the U.S. state in which the New York-based company is registered
Luxury goods group LVMH has said it will counter-sue Tiffany, accusing it of mismanagement through the coronavirus crisis. Pictured above, a Louis Vuitton store in Sydney, Australia
Both LVMH and Tiffany did not immediately respond to requests for comment.
Tiffany shares rose almost 5 percent to $128.78 on Tuesday after reports of a potential end to the dispute.
Louis Vuitton owner LVMH agreed last year to buy Tiffany in its biggest acquisition yet, betting it could restore the U.S. jeweller's lustre by investing in stores and new collections.
The deal was designed to boost LVMH's smallest business, the jewelry and watch division that is already home to Bulgari and Tag Heuer, help it to expand in one of the fastest-growing industry sections and strengthen its U.S. presence.
New York-based Tiffany, founded in 1837 and known for its signature pale blue boxes, retains a resonance as the go-to purveyor of engagement rings that only a handful of rivals can match.
Tiffany also said on Monday that it had received the nod from the European Commission for the deal's completion, thus clearing all regulatory hurdles.
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