THE LUXURY WORLD UNDER COVID-19'S PRESSURE
Only seven months have elapsed since the great announcement of Tiffany’s acquisition from LVMH group. The news fostered financial market’s confidence to the degree that Tiffany’s share price skyrocketed and LVMH confirmed its premium position challenging Richemont SA, owner of Cartier.
However, the behemoth of the luxury world seems to stagger during Covid-19 outbreak, and it is now trying to renegotiate Tiffany’s deal. Indeed, while the acquisition involved a multiple equal to 20.4 x EBITDA on the last 25th November, now LVMH CEO Bernand Arnault is trying to convince Tiffany&Co. to lower the before-agreed price of $135 per share. This attempt to renegotiation is supported by the claim concerning the potential Tiffany’s inability to repay some debt obligations. The seller is resilient and is keeping asserting that no ground exists for such accusations.
Covid-19 has negatively hit high-end-goods’ demand and it is threatening one of the most significant M&A announced last year: the possible lack of a positive outcome of LVMH’s tender offer would represent one of the biggest halts caused by the ongoing pandemic.