Clockwise from Top. Devil’s Advocate. LVMH, the European luxury colossus, had blockbuster news this week with the spectacular collapse of its acquisition of Tiffany’s. The details sound fairly benign: due to the ongoing US-France trade war over luxury goods, the French government requested that the deal closing be delayed until January 2021. LVMH claims that this qualifies as a MAE (Material Adverse Effect) under the purchase agreement, which allows a party to back out of the deal before closing in certain circumstances. Tiffany’s shareholders are incensed, and countersued to try and consummate the deal. Reading between the lines, we have to assume that LVMH was unhappy with the deal struck to buy Tiffany’s at $135/share way back in November 2019. It’s currently trading at about 20% below the purchase price, and LVMH may be looking for leverage to get a discount on the original $16B deal. We would also not be surprised if Bernard Arnault, the chairman of LVMH, may have used his connections in the French government for assistance in delaying things. LVMH also threw some shade at Tiffany’s,
TT Vol. 19
TT Vol. 19
TT Vol. 19
Clockwise from Top. Devil’s Advocate. LVMH, the European luxury colossus, had blockbuster news this week with the spectacular collapse of its acquisition of Tiffany’s. The details sound fairly benign: due to the ongoing US-France trade war over luxury goods, the French government requested that the deal closing be delayed until January 2021. LVMH claims that this qualifies as a MAE (Material Adverse Effect) under the purchase agreement, which allows a party to back out of the deal before closing in certain circumstances. Tiffany’s shareholders are incensed, and countersued to try and consummate the deal. Reading between the lines, we have to assume that LVMH was unhappy with the deal struck to buy Tiffany’s at $135/share way back in November 2019. It’s currently trading at about 20% below the purchase price, and LVMH may be looking for leverage to get a discount on the original $16B deal. We would also not be surprised if Bernard Arnault, the chairman of LVMH, may have used his connections in the French government for assistance in delaying things. LVMH also threw some shade at Tiffany’s,