Coeur de Lion
advertisement
Coeur de Lion
advertisement
Coeur de Lion
advertisement
Goto your account
Search Stories by: 
and/or
 

News













Despite speculation the deal could fall through, an LVMH executive has confirmed the French luxury conglomerate will proceed with its acquisition of Tiffany & Co.
Despite speculation the deal could fall through, an LVMH executive has confirmed the French luxury conglomerate will proceed with its acquisition of Tiffany & Co.

LVMH reiterates commitment to Tiffany & Co. takeover as revenues decline

French luxury conglomerate Moët Hennessy Louis Vuitton SE (LVMH) has indicated it intends to proceed with its takeover of Tiffany & Co., despite declining sales due to COVID-19 and widespread unrest in the US.

Media reports that the $US16.2 billion deal could be altered or abandoned surfaced in early June,  as Tiffany & Co.’s international sales declined by 45 per cent in the first quarter of 2020. Fuelling rumours, LVMH held an executive meeting to discuss the terms of the acquisition – which is the largest in its history – on 3 June.

Antonio Belloni, group managing director LVMH
Antonio Belloni, group managing director LVMH
"We believe that Tiffany is one of the most iconic jewellery brands. As such, it fully has its place in the LVMH portfolio"
Antonio Belloni, Moët Hennessy Louis Vuitton SE (LVMH)

However, speaking at the LVMH annual general meeting – conducted as an online presentation – on 30 June, Antonio Belloni, group managing director LVMH, said, “We believe that Tiffany is one of the most iconic jewellery brands. As such, it fully has its place in the LVMH portfolio.”

The jewellery company’s most recent financial report confirmed it recorded a loss of $US65 million ($AU94.7 million) for the three-month period to 30 April. Declines were concentrated in the US and Asia-Pacific regions, with Mainland China recording an 85 per cent fall in sales in February.

The result was attributed to the COVID-19 pandemic, with approximately 70 per cent of its 324 international stores closed as at 30 April. By 29 May, 80 per cent of international stores had reopened; however, as at 8 June, only 55 per cent of its US stores – Tiffany & Co.’s largest market – had fully or partially reopened.

Yet Alessandro Bogliolo, CEO Tiffany & Co., said recent sales figures in China indicated that a “robust recovery is underway”.

He added that international e-commerce sales had increased 23 per cent for the quarter and represented 15 per cent of Tiffany & Co.’s total sales in 2020, compared with 6 per cent in 2019, 2018 and 2017.

While Bogliolo remained optimistic, the company confirmed it had amended its debt agreements in light of the financial pressure caused by the pandemic, drawing down $US500 million from its revolving credit facility. Tiffany & Co.’s total debt is now $US1.5 billion, a 16 per cent increase from 2019.

The debt restructuring further fuelled speculation LVMH could be preparing to alter the terms of its acquisition. However, Mark Erceg, chief financial officer Tiffany & Co., offered reassurance to shareholders, noting that the debt amendments were permitted under Tiffany & Co.’s Merger Agreement with LVMH.

“Tiffany has an investment-grade balance sheet, has ample cash on hand and was in compliance with all debt covenants as of April 30, 2020. Nonetheless, we still took the decision (as have many other companies) to amend certain of our debt agreements in order to create additional financial covenant headroom given these unprecedented times,” he explained.

Upon the release of its financial results, Tiffany shares fell more than 10 per cent. They were trading at $US121.94 at the time of publication.

LVMH has indicated it will not buy Tiffany & Co. shares on the open market and will maintain its offer of $US135 per share, which was accepted by Tiffany & Co. shareholders in February this year.

Alessandro Bogliolo
Alessandro Bogliolo
"I am confident that Tiffany’s best days remain ahead of us and I am excited we will be taking that journey with LVMH by our side"
Alessandro Bogliolo, Tiffany & Co.

In the report, Bogliolo stated that the LVMH deal – which was initially expected to close in July 2020 – will proceed, saying, “I am confident that Tiffany’s best days remain ahead of us and I am excited we will be taking that journey with LVMH by our side.”

He also addressed delays in international regulatory clearance, confirming that authorities in both Russia and Mexico had approved the acquisition of Tiffany’s subsidiaries in those territories. South Korea’s Korea Fair Trade Commission cleared the takeover to proceed on 12 June.

As previously reported by Jeweller, Australia’s Foreign Investment Review Board (FIRB) was initially expected to approve the takeover in April, however due to changes in the regulatory framework, its review deadline was extended.

On 6 July, Tiffany & Co. informed the US Securities & Exchange Commission that FIRB had cleared the acquisition to proceed; however, the company's filing noted that "additional regulatory clearances" and "other customary closing conditions" were yet to be finalised.

 

More reading: 
Australian regulators stall LVMH acquisition of Tiffany & Co.
LVMH acquires Tiffany & Co. for $US16.2 billion
Tiffany & Co. leaves door open to LVMH takeover
LVMH confirms plans to buy Tiffany & Co.











Dansk Copenhagen
advertisement





Read current issue

login to my account
Username: Password:
SAMS Group Australia
advertisement
Baume & Mercier
advertisement
Thomas Sabo
advertisement
© 2020 Befindan Media