Paris (AFP) - French luxury goods conglomerate LVMH said Thursday it would not exploit weakness in the share price of its US takeover target Tiffany to pick up stock in the iconic jewellers on the cheap.
In a deal worth $16.2 billion agreed at the end of last year, the French luxury giant promised to buy the legendary US brand at $135 per share -- the industry's biggest takeover ever and hailed by analysts at the time as a promising expansion for LVMH into a thriving US market.
But since then the coronavirus pandemic has hit the US economy hard and ongoing race-related unrest has added to the uncertain outlook for the luxury sector.
Following a report that LVMH might walk away from the deal, Tiffany's share price dropped well below the offer price, closing at $114.24 on Wall Street on Wednesday.
On Thursday, LVMH promised it would not be buying Tiffany stock in the open market where the price now reflects shareholder expectations that the deal will likely fall through.
"Considering the recent market rumors, LVMH confirms, on this occasion, that it is not considering buying Tiffany shares on the market," it said.
At a meeting Tuesday, the LVMH board had "notably focused its attention on the development of the pandemic and its potential impact on the results and perspectives of Tiffany & Co with respect to the agreement that links the two groups", it said.
LVMH did not say, however, whether it still stood by its offer.
Fashion publication Women's Wear Daily reported earlier that LVMH was reevaluating the deal, citing people familiar with the matter.
LVMH, which owns Louis Vuitton, Bulgari and Dior, also has concerns about Tiffany's debt level, it said.
The company has not communicated its current thinking to Tiffany, banking sources told AFP this week.
Some analysts say LVMH may lower its offer price for Tiffany to reflect the new circumstances.
The deal was originally due to close by mid-2020.
