The largest deal in the history of luxury - the purchase of the jewelry brand Tiffany & Co. by LVMH holding - may not take place.
The LVMH Board of Directors convened a meeting in Paris on Tuesday evening to discuss the situation, WWD reported, citing sources. LVMH is alarmed by the global coronavirus pandemic and protests that erupted in dozens of U.S. cities after George Floyd died at the hands of police in Minneapolis.
The French company's board members also expressed doubts that Tiffany would be able to close all debt covenants by the end of the deal, Reuters reports.
No final statements were made at the meeting, but the board members agreed that LVMH needed to reconsider its decision to purchase the jewelry brand.
The owners of the Louis Vuitton LVMH brand and Tiffany, founded in 1837 last November, reached an agreement to sell the U.S. jewelry chain to the French for $16.2 billion.
This deal initially planned for the middle of this year, would be the largest takeover in the history of LVMH.
On the eve of the close of trading, Tiffany & Co shares fell by almost 9 percent.
In April, during a discussion of LVMH's first-quarter revenues, the holding's CFO, Jean-Jacques Guilloni, told reporters that the deal was still on track. He noted that LVMH would adhere to the terms of the contract. The purchase of Tiffany & Co. should have allowed LVMH to gain control over a profitable segment of jewelry.
LVMH was not the first to decide to revise the terms of the deal due to the deteriorating economic situation in the world. Earlier Sycamore Partners refused to buy Victoria's Secret. Analysts considered the deal with Sycamore Partners as the only opportunity to save the lingerie brand, which lost revenue due to changes in consumer tastes and allegations of harassment from models and employees.