Listen, we’ve all been there.
You’ve agreed to buy something on eBay but then got wet feet and told the seller, “Hey, sorry, my significant other says we can’t afford this.”
LVMH Moët Hennessy Louis Vuitton (LVMH) — the $211B conglomerate owned by France’s richest man, Bernard Arnault — basically tried to do the M&A equivalent of that move.
In 2019, LVMH announced a blockbuster ~$16B deal for Tiffany
The move was meant to boost the luxury house’s fast-growing watch and jewelry lines as well as lay claim to a splashy American brand.
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Then the pandemic hit and lux retail didn’t look so hot. Tiffany’s same-store sales fell by 44%, and LVMH had some serious buyer’s remorse.
In September of this year, LVMH tried walking from the deal, citing concerns over US-EU tariff disputes.
US courts don’t look kindly on deal mulligans
Tiffany sued LVMH to consummate the deal, and LVMH sued back, citing that the pandemic had caused “material adverse effects.”
Per The Economist, courts in Delaware — the business-friendly state where ~50% of S&P 500 companies are incorporated — have only broken a corporate marriage due to “material adverse effects” one time (a health care deal).
Now, LVMH is in talks with Tiffany to close at a slightly lower price.
Sorry, Bernard — this ain’t eBay.