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Rejigged Tiffany deal would be face-saving truce

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A bling takeover row may end with a face-saving truce. French behemoth LVMH and its target Tiffany are negotiating a price cut on the US jeweller's pre-pandemic US$16 billion price tag, Reuters reported on Tuesday.

[MILAN] A bling takeover row may end with a face-saving truce. French behemoth LVMH and its target Tiffany are negotiating a price cut on the US jeweller's pre-pandemic US$16 billion price tag, Reuters reported on Tuesday. A deal at around US$130 a share may get Tiffany to the table. It would save French tycoon Bernard Arnault some US$600 million - hardly a massive amount. But settling for a discount, albeit small, could offer benefits to both.

For Tiffany, getting a new agreement quickly makes obvious sense. The pandemic has taken some of the sparkle off the New York-based company. Enforcing its merger contract in court, as it's trying to do, further delays the arduous process, and there's no guarantee it will be successful. If it pushed through the US court system and failed to force LVMH to close the deal, its shares would tank. Worse, chief executive Alessandro Bogliolo would have to battle the fallout of Covid-19 on his own as it continues to ravage its main US market.

For Mr Arnault, obtaining a discount may be a matter of pride more than finance. The tycoon baulked at Tiffany's decision to continue to pay dividends during the virus crisis. Cutting the deal by US$5 a share saves him just 4 per cent. But he's kicked up such a fuss - and already put his own shareholders through the uncertainty by snubbing the original US$135-a-share offer - that he needs to save face.

More importantly, with the merger now clear of antitrust hurdles, a quick deal might allow LVMH to own the jeweller before Christmas and the all-important Chinese New Year. If given the chance, best for both companies to start 2021 on the right foot.

US jeweller Tiffany and LVMH are in talks to settle the price of the French group's planned US$16 billion acquisition at a price slightly below the US$135 per share offer agreed last November, Reuters reported on Oct 27 citing sources familiar with the matter.

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Talks are focusing on a US$131-US$134 price range, Reuters added.

The deal ran into trouble last month when LVMH said it could no longer complete the takeover by a Nov 24 deadline.

Tiffany has taken LVMH to court in Delaware as it sought to force LVMH to honour the original deal terms.

REUTERS

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