Has COVID-19 Affected The Tiffany-LVMH Deal?

What Happened

Tiffany & Co. might have to wait until October to get its ring. The process of getting regulatory approval for LVMH’s acquisition of the American jeweler — something that’s required from antitrust enforcement agencies around the world — has slowed down amid the current crisis. In a Security and Exchange Commission filing this Wednesday, Tiffany said that the Australian Foreign Investment Review Board (FIRB) extended its review deadline from April 8 to October 6 this year due to the COVID-19 outbreak. But, Tiffany noted, it’s still possible to have this transaction approved by the new deadline.

The New York-listed company expects to close the $16.2 billion deal in mid-2020 as originally planned, the filing says. But before that, the merger still has to receive regulatory clearance from authorities in Europe, China, and Japan, among others, before moving forward. It is unsure whether the review process in other countries will also be affected by the global pandemic.  

Jing Take

The acquisition agreement was made in November, months before COVID-19 spread around the world, sending shockwaves across the luxury sector. Although, now that LVMH’s business has been impacted by COVID-19, does the conglomerate still want to make the largest acquisition in its history while surely facing a bleak economic outlook?

Bloomberg reported last month that there are signs LVMH might retract the deal, and sources have disclosed that the group is considering buying Tiffany’s stock on the open market for less instead. LVMH agreed to buy Tiffany at $135 a share, but, as of early afternoon today, the jewelry seller’s stock price stood at $129 a share. 

LVMH might need Tiffany to boost its growth in the Americas and Asia Pacific region, where it wants to further capitalize on Chinese consumers. But will a delayed deal give LVMH second-thoughts about this decision? That’s a question LVMH CEO Bernard Arnault must prepare to answer before the group’s Q1 earnings call next week.

The Jing Take reports on a leading piece of news while presenting our editorial team’s analysis of its key implications for the luxury industry. In this recurring column, we analyze everything from product drops and mergers to heated debates that sprout up on Chinese social media.

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