Tiffany (TIF) Has Slim Chances In LVMH Deal

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At the end of the last year, Tiffany shareholders gave it a go ahead to deal with Louis Vuitton-Moët Hennessy (LVMH), the French luxury company. In 2019, the controversy over the price of the merger emerged and was the source of heightened uncertainty of both firms’ shares over the past few months. There was a question at certain points that the deal would not take place at all. As a consequence, the holders of 99 percent of the voting stock of Tiffany approved the deal. The deal has been valued at $15.8 billion.

LVMH’s stance, which found the previously negotiated price too high, was the principal barrier to the merger. Over the pandemic, prices of the entire packaged goods industry fell by a third, and three times during the past year, Tiffany’s share fell 15-17 percent below the transaction price. Under hindrance from the French authorities, LVMH managed to evade the takeover, which nearly resulted in a legal battle.

The offer was settled at a new price in the autumn, which proved to be comfortable for both parties: the firm would pay $131.5 for each share of Tiffany instead of the originally pledged $135 for each share of Tiffany (2.94 percent lower in dollars and almost 10 percent lower in euros). The acquisition has been authorized by regulators in France and the United States, and it is likely to close this week.

The market share price of Tiffany didn’t respond to the news. In recent weeks, the company’s shares have been held close to the LVMH selling price in a short corridor. LVMH shares and receipts are overvalued by 8%. There is no big hope for Tiffany’s success today.

The currency has larger influence on companies’ business. The corporation’s earnings are based on international markets, including the United States and China, and its revenues and capitalization are posted in the euro, which, this year, indicates inflation in excess of the dollar.

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