Tiffany agrees on sale to LVMH at $425m discount

US jeweller may seek a guarantee that Louis Vuitton owner will not back out of any revised deal

Tiffany announced that worldwide net sales for August and September declined slightly from the comparable period in 2019 while operating earnings increased 25 per cent from the corresponding period last year. Photo: Courtesy TiffanyShow less

US luxury jewellery retailer Tiffany's board approved an agreement to revive its sale to French luxury goods giant LVMH at a $425 million discount from the initially agreed $16 billion, according to media reports.

The negotiations were based on a price of around $131.50 for each Tiffany share, against the $135 price when the deal was originally agreed in November last year, Bloomberg and several other media outlets cited sources as saying.

The new agreement comes after a war of words, French government intervention and lawsuits in the US over LVMH backing out from the original deal.

Tiffany had filed a lawsuit against LVMH in a US court last month after the French conglomerate backed out of the deal, citing a letter from the French foreign minister instructing the company to delay the deal amid a trade dispute with the US.

In response, the Louis Vuitton owner, run by Bernard Arnault, the world’s fifth-richest man, filed a countersuit against Tiffany, claiming conditions to close its buyout of the retailer were not met and accused the jeweller’s executives of mismanaging the business during the pandemic.

By striking a new deal, the companies can avoid a courtroom battle that was set for January in the US. However, under the new terms, the New York jeweller may seek a guarantee that LVMH would not back out of any revised deal, according to Bloomberg.

The original deal’s closing date of November 24 is unlikely to be met.

LVMH’s acquisition of Tiffany would have been the biggest ever in the luxury industry and was meant to expand the French luxury giant’s relatively modest presence in jewellery. Terms were agreed before the onset of the coronavirus.

However, the coronavirus pandemic sparked worldwide economic turmoil and dented sales in the global luxury goods market.

We are very pleased with the way the business has rebounded following the first quarter and continues to rebound in the third quarter, especially in mainland China

Earlier this month, Tiffany said its worldwide net sales for August and September declined slightly from the comparable period in 2019 while operating earnings increased 25 per cent from the corresponding period last year.

“While we still expect full-year results to be substantially impacted by Covid-19, we are very pleased with the way the business has rebounded following the first quarter and continues to rebound in the third quarter, especially in mainland China, and recovers in the United States,” Alessandro Bogliolo, chief executive of Tiffany, said at the time.

Confirming positive sales trends in October, the US jeweller said that global e-commerce sales nearly doubled in the two-month period from the comparable period in 2019.