It seems like LVMH has hit another snag in its bid to close its deal to acquire Tiffany & Co.
The French luxury conglomerate helmed by Bernard Arnault will put a three-month pause on finalizing the deal with the historic American jeweler, according to sources who spoke with Reuters. The $16.2 billion purchase was LVMH’s largest to date and a critical chess piece in its long-term expansion strategy.
Original documents named August 24th as the date by which the deal was set to close, but they came with a provision allowing for a deadline as far as November 24th, according to a filing Tiffany submitted to the U.S. Securities and Exchange Commission as part of the procedure. Tiffany & Co. specifically is said to be pushing for this late deadline. Both parties are still awaiting regulatory approvals from the European Union as well as other governing bodies in addition to wading through fiscal concerns raised by the Covid-19 pandemic.
— Reuters (@Reuters) August 24, 2020
Tiffany & Co., though a stalwart brand and one of the only heritage luxury houses in the United States, has struggled financially for years. Arnault made the move to purchase the company as competition from his chief rivals, such as Kering’s François-Henri Pinault, grows stiffer, and cementing his legacy becomes increasingly important to the 71-year-old business titan. However, the plan was only officially set into motion at the tail end of November last year, just a few months shy of the coronavirus’s spread into the West where it continues to wreak havoc on human life and markets.
The economic fallout caused a rumored renegotiation of the deal at the beginning of June before company officers decided against it. Arnault reportedly received intense pressure from members of the LVMH board to reconsider the deal entirely given the toll the pandemic has taken on LVMH stock. The collective effect of store closures and a lack of tourist spending combined to slash company profits by 84 percent for the first half of 2020 with any kind of robust recovery still more than a little ways off.
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