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LVMH and Tiffany deal now uncertain

By Kristopher Fraser

3 Jun 2020

Business

The 16 billion dollar for luxury conglomerate LVMH, the parent company of Louis Vuitton, Dior, and Givenchy, to buy legendary jewelry company Tiffany & Co. is now in limbo. With the U.S. economy essentially in the gutter, LVMH board members met to discuss the proposed deal on the table. Their immediate concerns were the economic fallout from coronavirus and how ongoing protests against police violence will affect their business. They are also concerned as to whether or not Tiffany can cover its debts at the end of the transaction.

On Tuesday, trading of Tiffany's shares was halted briefly due to volatility as shares fell by 13 percent, the most in a day since 2015, finally closing down at 8.9 percent. Mergers and acquisitions have stopped being the major focus for companies as they are working to keep the brands already in their portfolio afloat. As of June 1, Tiffany's stores are still closed and according to the company they will remain so until further notice.

LVMH originally wanted to acquire TIffany & Co. to compete with luxury jewelry brand Cartier. In a pre-coronavirus world, this deal made perfect sense, but as consumers curb spending and luxury retail brands are being looted, acquiring Tiffany's might not be the best move for LVMH right now.

Tiffany & Co. has been struggling with a decline in tourist traffic and economic fallout from China due to both the Hong Kong protests last year and the global coronavirus pandemic, which originated in Wuhan, China. The company still intends to make China a top priority and work on bringing in younger clientele.

photo: via Tiffany & Co. Facebook page