Tiffany Stock Plunges 9% After Report That LVMH Deal Could Fall Through

TOPLINE

Shares of Tiffany & Co. plunged on Tuesday after a report that its blockbuster $16.2 billion takeover by luxury goods giant LVMH, which would have been the biggest luxury brand deal ever, is now looking less likely to go through.

KEY FACTS

Key background

LVMH originally reached a deal to buy Tiffany & Co. in November 2019. The agreed upon purchase price was for $135 per share ($16.2 billion in cash). At the time, many analysts credited LVMH’s billionaire owner, Bernard Arnault, for his savvy dealmaking: The deal was heralded as strengthening LVMH’s presence in North America and building on its foundation in the jewelry market. 

Tangent

As the coronavirus pandemic caused widespread business closures, global mergers and acquisitions were largely put on pause. Many companies were forced to abandon takeover deals altogether, as they struggled to stay afloat and pay workers. Xerox, for instance, walked away from its $35 billion bid for rival printing company HP. The M&A pipeline has slowed as companies struggled to do business amid a lack of debt financing and restricted face-to-face contact for business deals. A good amount of remaining M&A activity, however, will likely be dominated by rescue deals and restructurings, as companies struggle to cope with the negative economic impacts from coronavirus. 

What to watch for

Tiffany shares are still up 30% in the last twelve months, in large part buoyed by the prospect of a takeover by LVMH. If the massive deal does fall through, however, investors will likely reassess—especially given the challenging economic backdrop for retailers today.

Further reading

M&A Activity Plunges, It Could Get Much Worse As Coronavirus Hits Markets And Prevents Face-To-Face Meetings (Forbes)

Louis Vuitton Owner LVMH Buys Tiffany For $16.2 Billion (Forbes)

Mass Protests Across The U.S. Have No Impact On Stocks, What Gives? (Forbes)

Stocks Turn Positive After Trump Keeps Phase One China Trade Deal Intact (Forbes)

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