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Deals are never done until they’re done — and LVMH Moët Hennessy Louis Vuitton’s $16.2 billion acquisition of Tiffany & Co. still has a way to go.

WWD’s report on Tuesday that LVMH board members huddled in Paris to pore over the planned takeover again in light of the deteriorating situation in the U.S. sent the jeweler’s shares reeling and had investors and analysts looking at all the angles. 

LVMH is said to be concerned about the coronavirus, the tanking economy and social unrest following the death of George Floyd, and also weighing whether Tiffany will be able to remain in compliance with its debt covenants. 

Tiffany was expected to release its first-quarter results on Friday, but the company said in a Securities and Exchange Commission filing that it was pushing that back to Tuesday. No reason was given for the delay.

The jeweler’s stock fell 2.4 percent to $114.24 on Wednesday, extending the 8.9 percent drop on Tuesday after the WWD report. (LVMH’s stock fared just fine after the possibility of no deal cropped up and rose 2.2 percent to 393.45 euros in Paris).

The Tiffany stock is now well below the $135 a share that LVMH chief Bernard Arnault agreed to pay, but would likely drop much further still if the deal evaporated. 

That pressure could bring Tiffany back to the table to negotiate a lower price if LVMH can find a way out of the “definitive agreement” to merge. 

While the contract is seen as relatively buttoned up — as one would expect from a practiced consolidator like Arnault — these are unsettled times and where there’s a will, there could be a way.

Other would-be buyers have gone to court to get out of deals. 

Sycamore Partners sued L Brands Inc. to get out of its deal to buy control of Victoria’s Secret and successfully muddied the waters enough that L Brands just decided to move on and try to turn around the business on its own. And David Simon, chief executive officer of Simon Property Group, stoked concerns that the planned $3.6 billion acquisition of competitor Taubman Centers Inc. was up in the air when he declined to comment on the deal on a conference call with analysts. 

This is an unusual amount of uncertainty for the world of big-time dealmaking, but nothing is normal right now.

The dangers of the COVID-19 crisis were generally not appreciated or were entirely absent when these deals were struck and the near-complete shutdown of business for two months and the slow start-up have taken their toll. 

Forecasting firm IHS Markit on Wednesday revised its 2020 estimate for U.S. GDP to an 8.8 percent contraction and pointed to only “a grudging recovery.” IHS said it believes job losses topped 30 million last month, pushing the unemployment rate to 19 percent. Its warning followed a Congressional Budget Office report that said the pandemic’s impact will be felt in the U.S. economy for the next 10 years.

That has pressured businesses of all stripes, including Tiffany. 

“In light of the recent termination of the L Brands deal in the retail space, investor concerns around the Tiffany deal have been mounting,” said Oliver Chen, a Cowen analyst who covers Tiffany. “Furthermore, protests in metropolitan areas in the United States have added downside risk and may adversely affect consumer confidence, store openings, sentiment, and traffic. We still view the long-term opportunity as substantial and attractive, and strategically and financially, the deal would be accretive to LVMH — particularly the growth opportunities in China and with respect to gifting and bridal categories. However, we acknowledge the most important driver for whether the deal may or may not happen is the acquirer’s intent and desire.

“We view LVMH as a patient long-term investor interested in brands with strong heritages,” Chen said. “At the same time, LVMH manages prudently for return on invested capital and would not want to overpay relative to fundamentals and our estimates have been revised lower since the deal was announced on Nov. 25 and could have incremental risk now.”

LVMH is said to be concerned that Tiffany could break some of its debt covenants and Chen said that appeared to be possible by the second quarter. He also noted Tiffany could potentially use some of its $750 million in cash to pay down debt and buy more time or get some wiggle room from lenders. 

Douglas Hand, an attorney at Hand Baldachin & Associates, did not work on the deal, but reviewed the contract and said Tiffany did agree to run its business as usual until the deal closes. 

With the massive disruptions from COVID-19, LVMH could make an argument similar to the one made by Sycamore on Victoria’s Secret and say Tiffany has not run its business in the normal course, said Hand.

The same argument could be made if the company were to breach any debt covenants, he said. 

LVMH could also try to claim the merger agreement’s “Material Adverse Effect” condition was met by the pandemic.

Hand said there was enough in the contract to drag the issue into court and that the litigation itself could be enough to get Tiffany to be open to renegotiate the price lower. 

But it’s a high-stakes maneuver. 

“When one party wants to get out of the deal, as we saw with L Brands and Sycamore, sometimes the counterparty just lets them out because, who wants to go to the prom with the guy who now is actually telling you, you look ugly?” Hand said.

And if the strategy were to lower the price, even winning could mean losing — in a way — for Arnault, since the Tiffany organization might not fit as neatly into the LVMH empire after a big fight. 

“He’s risking the whole deal, but that may be exactly what he wants,” Hand said. 

Arnault might be willing just to drop the deal rather than get a lower price and “a sour portfolio company in the U.S.,” Hand said.