- Kristopher Fraser
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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
