One might have mistakenly thought by now that the LVMH and Tiffany mega-deal was a done deal by now. Nothing is further from the truth however. The acquisition agreement between LVMH and Tiffany was announced in November 2019. But, that was just the engagement announcement.
Between getting engaged and getting married a lot can go wrong. Like say, a global pandemic could break out. You see, the deal announced at the time valued Tiffany at a certain price. With the markets having crashed dramatically following the Covid19 pandemic, that price is by now higher than what the market is valuing it at.
So, will LVMH willingly pay a higher price than is necessary? Is LVMH a Charity? I don’t think so. Therefore, it is growing increasingly likely that LVMH will in fact pull out of the deal, and instead buy Tiffany’s shares on the open market (which are currently trading at a lower price).
The 16.2 Billion deal, not being finalized yet, also can perhaps make for a less compelling case with the world economy now flat on its back. Another scenario could then be that LVMH entirely backs out of its acquisitions plan.
Unclear whether in such break-up scenarios Tiffany would be keeping the engagement ring.