The deal is back on…
Tiffany and LVMH have officially reached a deal.
Earlier this year, we talked about the ongoing deal regarding LVMH’s acquisition of Tiffany. Many investors were excited over the possible deal – glad to see money being pumped into the retail sector. But that deal quickly hit a snag, nearly burning out in a dramatic disagreement.
Back in September, LVMH had announced that it would be stepping back from its plan to acquire Tiffanys- which was expected to be the largest deal in history. LVMH explained that Brussels and Washington’s current trade fight had led the company to pull the plug on the agreement. But many speculated that the company made this move to renegotiate the sale for a lower price.
This led to Tiffany suing LVMH, noting that the French had no legal grounds and had breached its obligations. LVMH quickly countersued, explaining that the pandemic damaged Tiffany’s business and severely impacted its value.
And then the news of this deal fell into the background as new and exciting stores stole the spotlight.
Where’s the money?
The dust has settled now, though, and to much surprise, it looks like LVMH and Tiffany have worked a deal out after all. And LVMH got a nice discount while they were at it.
The companies announced recently that they have finally found common ground on the merger agreement. This new agreement lowers the price per share that LVMH will pay from $135 to $131.50. The move now values Tiffany at $15.8 billion, $400 million less than the $16.2 billion originally agreed upon.
This deal, which is set to close early next year, could be a big win for both companies. And LVMH could really see its American business boosted. But more importantly, this is a very good message for the sector, and it will increase investors’ confidence as they see big deals still happening despite the pandemic and retail sector struggles.
How do I get some?
First off, I have to tip my hat to LVHS. Not only does the company have the most revenue of any luxury brand in the world, but now, they have also saved themselves $400 million. Truth be told, mergers and acquisitions are often a poker game and who can hold the upper hand the longest. You can never show your cards until the game is over.
And that’s precisely what LVHS did.
With that said, I don’t think this is the last massive merger we’ll be seeing, and I can see many of the big names buying out smaller ones for a discount. And I’m keeping a close eye on one name – AMZN. I think AMZN could expand their store fronts and buy Macy’s, and that’s a deal that could catch my eye. So, I’ll be looking out for more news on the horizon, and I’ll be sure to keep you updated.
In the spotlight: Ford just delivered big numbers…
The automobile industry hasn’t reported the best numbers over the years. But the big names have been working overtime to overhaul the sector – introducing new and exciting models, stepping up to make more eco-friendly options, and more. And Ford officially sees the benefits of the hard work.
The company announced earnings recently and revealed that it had returned to profitability in a big way thanks to the jump in demand for their trucks and new models. The company earned $2.6 billion, excluding special items, nearly double the $1.4 billion it had earned at this time last year. And it was far above the $932 million profit that analysts had forecast for the quarter.
This performance was impressive given the earlier in the year; Ford posted massive losses as the pandemic had shutdown auto plants and slashed car sales severely. And in the first six months, Ford’s net loss came in at $2.3 billion.
And Ford isn’t the only automobile company that saw a bounce back. Shares of Ford (F) and rivals General Motors and Fiat Chrysler are all up more than 25% since the beginning of June. With that said, this bounceback is a promising win for the industry and the economy as a whole. And I’ll be keeping a close eye on this sector in the weeks to come.
This is All Good News…
Mergers and earnings jumps are all certainly positive news, and will undoubtedly lead to some optimism.
But the bad news is that, while stories like these do pop up periodically, how do you know when the next profit opportunity will be?
You can either spend your time glued to your computer, following the trends and crossing your fingers that the stocks that make headlines also make money…
Or you could use a system that provides profits like clockwork, regardless of market conditions.
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