Tiffany, LVMH near Agreement on New Deal Terms

New agreement calls for LVMH to pay USD 131.50 a share, down from USD 135.

By guest authors Cara Lombardo and Dana Cimilluca from Wall Street Journal

Caption courtesy by Wall Street Journal

Tiffany & Co. is nearing an agreement to accept a lower price in its takeover by LVMH Moët Hennessy Louis Vuitton LVMUY SE that would end a bitter dispute between the luxury-goods companies.

The companies have come to a preliminary agreement on new deal terms that would call for LVMH to pay USD 131.50 for the iconic U.S. jewellery maker, according to people familiar with the matter. That is down from a prior agreement of $135 a share.

Tiffany’s board plans to consider the revised terms at a meeting later Wednesday, and there is no guarantee they will accept them, the people said. Should they accept the revised terms, litigation that erupted over the deal would go away and conditions required for it to close would be reduced, some of the people said. That would pave the way for a new shareholder vote and a closing of the deal possibly by January.

CNBC reported Tuesday that the companies were discussing a new price.

Tiffany agreed to sell itself to LVMH late last year in a roughly USD 16.2 billion deal. The acquisition represented the biggest bet yet by LVMH under Bernard Arnault, the French billionaire who has been its chief executive and controlling shareholder for three decades. But LVMH said in September it was backing out of the deal, blaming trade disputes between France and the Trump administration. Many saw the move as a bid to lower the price.

Tiffany said the argument was a pretext to back out of the deal after the coronavirus pandemic upended the luxury-goods industry and sued LVMH in Delaware Chancery Court to enforce the agreement. That prompted LVMH to countersue, arguing the U.S. jeweller’s business had been so deeply damaged during the pandemic that their takeover agreement is no longer valid.

Tiffany’s board is confident in its legal position but may accept a slight price reduction for increased certainty of a deal closing, one of the people said. Tiffany shareholders have also continued to receive a 58-cent per-share quarterly dividend in the meantime and may get another one before the deal closes.

The two sides were set to go to trial in early January.