As the world is facing a difficult financial situation with markets deteriorating and businesses barely resuming their activities, deals between companies are also suffering.
Last November, the luxury-goods giant, LVMH, partially closed a deal to buy Tiffany & Co. At that time, a deal was agreed at $135 per share, meaning $16.2 billion in cash. Analysts saw this as a way for LVMH to secure its presence on the North American market.
But the recent market development made LVMH reconsider its position. At the most recent board meeting in Paris, members have discussed the US deterioration and whether or not the buyout price is too high. The giant is concerned about Tiffany's ability to repay its debts once the takeover finalizes. LVMH's Board of Directors confirms "that it is not considering buying Tiffany shares on the market."
But LVMH is not the first company to revise its actions due to the pandemic. Earlier this year, Xerox abandoned a $35 billion deal with HP.
Tiffany stock gained more than 30% in the past year, in part boosted by the potential takeover. But after the announcement, it closed down by 9%.
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Sources: reuters.com, forbes.com