LVMH Submits $16B Tiffany Takeover For EU Approval


In an update regarding the troubled acquisition of Tiffany (TIF), LVMH confirmed that it has submitted the $16 billion proposed deal to the European Commission for antitrust review. The move comes amid accusations by Tiffany that LVMH is deliberately delaying requests for antitrust clearance to dissolve the deal.

On Sept. 18, luxury goods giant LVMH confirmed the submission of the proposed deal to EU “as it has always stated it would do.” The company added that 8 of the 10 ten requisite antitrust clearances have already been obtained and that it expects to receive approval from the European Commission and Taiwan well before the Nov. 24 deadline.

The proposed deal, which was announced last November, turned sour when LVMH recently said that it could not proceed due to Tiffany’s weakening business and the French government’s request to postpone the acquisition until Jan. 6, 2021 to assess the impact of potential US tariffs on French goods.

Tiffany then filed a lawsuit against the Louis Vuitton owner in a court in Delaware to enforce the merger agreement. Responding to Tiffany’s request to fast track the legal case, LVMH stated, “By asking the courts to rule urgently – and by communicating feverishly and hastily – Tiffany’s executives are clearly seeking to avoid having to answer, notably to their shareholders, for their bad results and mismanagement and to see their arguments fall one after the other.” (See TIF stock analysis on TipRanks)

Speaking about the recent developments, Guggenheim analyst Robert Drbul reiterated his Hold rating for Tiffany and said “LVMH offered to pay a full price plus a 50% premium to TIF’s 1-month average price during the negotiation period ($90.53; 10/25/19). While we are surprised to see LVMH appearing to step away from the negotiating table at present, we continue to believe the two parties remain a strong fit for one another and that a likelihood of a (re-)connection, albeit likely at a reduced price, is quite likely.”

The Street’s Hold consensus for Tiffany is based on 5 Holds and no buy or sell ratings. In terms of share price, Tiffany stock has plunged 13% so far in 2020 but might recover 8.4% in the coming months as indicated by the average analyst price target of $126.

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