Luxury goods company, LVMH, who has previously planned to take over Tiffany & Co. has decided to drop the takeover.
The takeover was agreed at U.S $16.2 billion before COVID-19 had emerged into our lives. Due to the pandemic, Tiffany & Co.’s share price, like many other large businesses, has dropped.
LVMH has decided to drop the takeover, due to the possibilities that French products were to be taxed heavily by the US. In the statement released by LVMH’s board, it stated that they hope to defer the acquisition until after January the 6th, next year.
Tiffany & Co. is prompted to file a lawsuit to enforce a deal instead.
“Tiffany alleges that LVMH has delayed the EU regulatory process to avoid closing before a mandated deadline and threatened to walk away from the takeover unless the price tag is reduced,” reported the Financial Times.
The takeover of Tiffany & Co. has been under ongoing speculation due to the impact of COVID-19 on luxury retail stores and international travel.
Tiffany & Co. has been a popular shopping destination at duty-free retailers at airports or similar. As consumers are now either restricted from going instore to purchase luxury goods along with travel restrictions, the luxury goods industry has undoubtedly taken a massive hit.
CEO of LVMH, Bernard Arnault, has expressed his concerns about 'overpaying' for the acquisition of Tiffany & Co. due to the current climate. However, he is still confident that the future acquisition, if agreed on a price, will give LVMH a more significant share of the U.S market, as well as being an opportunity for LVMH to expand its offerings in jewellery.