Tiffany & Co. (NYSE:TIF) has posted their results for Q4 2019.
Revenue came in at $1.40 billion which beat analysts’ estimates of $1.36 billion.
EPS came in at $1.66 which missed analysts’ estimates of $1.76.
These results, however, would no doubt be overshadowed by the current COVID-19 coronavirus outbreak that has affected just about every business in Europe or North America.
The focus for the near-term future for TIF will no doubt be the deal for TIF to be acquired by LVMH, the French luxury goods giant, which may be thrown into some chaos due to the ongoing crisis.
Some Background on Tiffany & Co.
Tiffany & Co., more commonly known as Tiffany’s, is an American luxury jewelry retailer based out of New York City.
Tiffany is know for selling luxury items such as diamonds, fine china, fragrances, and other high fashion items like watches and handbags.
Tiffany’s is one of the oldest companies in America that is still in operation. It was founded in 1837 by Charles L. Tiffany. Nowadays, Tiffany’s operates internationally, with a series of retail locations in places like China and other Asian countries, Europe, the UAE and of course, North America. In 2018, they brought in sales of over $4.4 billion USD.
In light of the recent COVID-19 outbreak, TIF has closed all of its stores in the U.S. and Canada for the time being.
The LVMH Deal
Back in November, it was announced that the French luxury company LVMH would be acquiring Tiffany’s at around $135 per share.
As a result of this deal, shares of TIF surged and traded very steadily at just under $135 per share for the next few months.
However, even with this deal in hand, it was hard for TIF to remain completely immune to the market crash that has happened in recent weeks, and the stock plunged to under $110/share before quickly recovering to around $126/share at the time of this writing.
The Head of LVMH, the French billionaire Bernard Arnault, has tried to reassure investors that despite the recent market conditions, that he is still committed to acquiring Tiffany’s and has no plans to abandon the deal.
However, in a new report published by Bloomberg, it appears that LVMH is trying to take advantage of the recent situation to scoop up shares of TIF on the open market at a significant discount since the market has been crashing.
This move is somewhat unusual to see, but would make a lot of sense strategically from a business perspective.
At current levels, LVMH would be getting a 13% discount compared to what they agreed to pay in the deal with TIF.
From a long-term perspective this outbreak might actually provide a brightside for LVMH who stand to save a lot of money on this deal.
It will be interesting to see in the near term if any more news comes out regarding the status of this deal. For now though, like many other business deals, it seems to have been put on hold as we brace for the resolution of the ongoing crisis with the coronavirus.
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