LVMH has agreed to buy Tiffany & Co at a $400 million discount on the original price, ending a bitter dispute. It’s still the luxury sector’s biggest-ever deal.

• French luxury goods giant LVMH is acquiring US jeweler Tiffany & Co for $15.8 billion – $400 million less that originally agreed in November 2019.
• Despite the price drop, this still marks the luxury sector’s biggest-ever deal.
• The new agreement between LVMH and Tiffany brings to an end a public war of words and a potential legal battle. LVMH in early September threatened to call off the deal.
• Visit Business Insider’s homepage for more stories.

After a bitter dispute including two lawsuits, confusion over a French government letter, and a public war of words, French luxury goods conglomerate LVMH is acquiring US jeweler Tiffany & Co for $400 million less that originally agreed.

Despite the price drop, this still marks the luxury sector’s biggest-ever deal.

The deal’s price tag has been brought down to about $15.8 billion after the new takeover price dropped from $135 to $131.5 a share, the companies said in a statement Thursday.

Despite the $400 million cut, Tiffany Chairman Roger Farah said the deal represented “an attractive price” for the jeweler, and added it was in the stakeholders’ best interests to close the deal.

Read more: Chinese consumers are buying more luxury goods during the pandemic — but they’re shopping closer to home, and European brands could feel the pinch

LVMH CEO Bernard Arnault said in the statement: "We are as convinced as ever of the formidable potential of the Tiffany brand and believe that LVMH is the right home for Tiffany and its employees during this exciting next chapter."

Other key terms of the deal, initially agreed almost a year ago, remain unchanged, the companies added.

The transaction, which has received regulatory clearance, is expected to close in early 2021, subject to Tiffany shareholder approval. Under the revised deal, Tiffany will pay its regular quarterly dividend of $0.58 per share on November 19.

"Tiffany and LVMH have also agreed to settle their pending litigation in the Delaware Chancery Court," the statement from the companies said.

The end to a bitter war of words

The new deal brings to an end a public war of words and potential legal battle between two of the luxury industry's best-known groups.

In October this year, Louis Vuitton owner LVMH said it could no longer complete the transaction by the November 24 deadline set out when the deal was initially agreed in November 2019.

It cited a French political intervention asking it to delay completing the acquisition until January 6, 2021 due to a threat of new US tariffs on French products, and also decried the jeweller's "dismal" performance during the coronavirus crisis.

Tiffany in return sued LVMH in a Delaware court, seeking to force it to honor the original deal — and LVMH then countersued the jeweler, saying that it could walk away from the takeover. The case had been scheduled to be heard in early January.

However, Tiffany recently approached LVMH with a more conciliatory tone, a source close to the matter told Reuters on Wednesday, particularly because of the worsening pandemic in Europe and the US, which continues to make business conditions deteriorate.

The deal is designed to boost LVMH's smallest business, the jewellery and watch division, which is already home to Bulgari and Tag Heuer, and help it expand in one of the fastest-growing industry segments while also strengthening its US presence.