LVMH: Oddo still a buyer, maintaining TP
(CercleFinance.com) - LVMH yesterday said that the completion of the Tiffany takeover no longer seemed possible "as things stand" at this point in time from a legal perspective.
Tiffany has applied for a further extension of the 24 November -31 December deadline (a delay that is clearly necessary to obtain approval from the competition authorities which have yet to rule), while the French government has asked it not to conclude the transaction before 6 January 2021, due to its tax dispute with the United States, Oddo says.
According to LVMH, the French government's request makes it impossible to conclude the transaction within the timeframe set or alleged (in Tiffany's new request), the broker adds.
Oddo points out that no additional extension beyond 24 November was provided for in the initial contract (in the absence of the necessary authorisations, the deal lapsed on that date).
Tiffany will take the case to a Delaware court to force LVMH to complete the originally agreed transaction.
Tiffany further states that it believes in its complaint that LVMH is directly responsible for the delay in obtaining approvals, which it believes constitutes a breach of its obligations.
Oddo believes that a definitive waiver by Tiffany would not be bad news. "As for the eventual cost of the waiver (substantial compensation?), hypothetical to date, it does not seem to us to have any lasting consequences on the share given the size of the two entities (LVMH enterprise value > 200 billion euros, Tiffany deal at about 15 billion euros).
Following this news, Oddo confirms its buy rating on the LVMH share, along with a target price of 352 euros.
Copyright (c) 2020 CercleFinance.com. All rights reserved.
The information and analyses distributed by Cercle Finance are only intended as decision-making support for investors. Cercle Finance's responsibility may not be entailed, either directly or indirectly following the use of such information and analyses by readers. Any non-professional investor is recommended to consult a professional advisor before making any investment decision. This indicative information in no way constitutes any invitation to sell or buy securities.
Tiffany has applied for a further extension of the 24 November -31 December deadline (a delay that is clearly necessary to obtain approval from the competition authorities which have yet to rule), while the French government has asked it not to conclude the transaction before 6 January 2021, due to its tax dispute with the United States, Oddo says.
According to LVMH, the French government's request makes it impossible to conclude the transaction within the timeframe set or alleged (in Tiffany's new request), the broker adds.
Oddo points out that no additional extension beyond 24 November was provided for in the initial contract (in the absence of the necessary authorisations, the deal lapsed on that date).
Tiffany will take the case to a Delaware court to force LVMH to complete the originally agreed transaction.
Tiffany further states that it believes in its complaint that LVMH is directly responsible for the delay in obtaining approvals, which it believes constitutes a breach of its obligations.
Oddo believes that a definitive waiver by Tiffany would not be bad news. "As for the eventual cost of the waiver (substantial compensation?), hypothetical to date, it does not seem to us to have any lasting consequences on the share given the size of the two entities (LVMH enterprise value > 200 billion euros, Tiffany deal at about 15 billion euros).
Following this news, Oddo confirms its buy rating on the LVMH share, along with a target price of 352 euros.
Copyright (c) 2020 CercleFinance.com. All rights reserved.
The information and analyses distributed by Cercle Finance are only intended as decision-making support for investors. Cercle Finance's responsibility may not be entailed, either directly or indirectly following the use of such information and analyses by readers. Any non-professional investor is recommended to consult a professional advisor before making any investment decision. This indicative information in no way constitutes any invitation to sell or buy securities.