After months of quarrels and spites, Lvmh and Tiffany get married. The two giants have reached an agreement: the French holding will acquire Tiffany for $131,5 per share, with a 1,2% premium to Tiffany's closing price on Wall Street on Wednesday. The total valuation of the American jewelry group is equal to 15,96 billions of dollars.
Thanks to today's agreement Lvmh will save about 400 million dollars: the original agreement concluded in November of last year provided for a price of 135 dollars per share.
"This agreement puts an end to all judicial initiatives opposing Lvmh and Tiffany before the Court of Delaware”, says Arnault's company in a note. The transaction is expected to close in early 2021, subject to approval by Tiffany's shareholders and customary conditions precedent.
The legal battle between the two groups had begun in September, when Lvmh had decided to take a step back from the agreement reached 10 months earlier due to the numerous commercial tensions born between the USA and France, the management problems of Tiffany and the crisis triggered by the coronavirus. After a close questioning and answering, a bitter legal battle began, made up of complaints and counter-complaints, which once the operation is finalized will be officially behind us.
The new agreement also provides that the payment of quarterly dividend amount of $0,58 per share announced for November 19, 2020 will be settled and paid by Tiffany.
"The balanced agreement reached with the Tiffany board of directors allows LVMH to work on the acquisition of Tiffany in complete serenity and to resume the discussions started with Tiffany's management on the modalities of the integration", he commented Bernard Arnault, number one of Lvmh. In a note, the French group says it is "more than ever convinced of the formidable potential of the Tiffany brand".
Tiffany's CEO, Alexander Bogliolo, underlines the trust "in the power and value of the Tiffany brand and in the indisputable long-term strategic and financial benefits" of the marriage with Lvmh.
We recall that on October 28 the acquisition of Tiffany by Lvmh also achieved the green light from the EU Commission. According to Brussels, the marriage between the two giants would not create competitive problems. The only overlap will be in the jewellery, but the concentration resulting from the merger will not lead to competition concerns given the combined entity's moderate market shares, the presence of a significant number of third party suppliers and the recent entry of several new competitors.
Among the main competitors is Richemont, owner of Cartier, with whom a no-holds-barred jewel challenge could arise.
After the announcement, in Paris the Lvmh title gains almost 1% to 405,8 euros, while in New York, futures indicate an increase of half a percentage point for Tiffany.
