Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Last Week in Event SPACE: Vedanta, Cardinal Res., Japan Retail Fund, HSBC, Opticomm, Tiffany/LVMH

Managing Director

Elan Gore

TMI Data Science

TMI Data Science utilizes Natural Language Processing to build custom leading indicators using unstructured data sourced from the global financial, trade & traditional media.  Our proprietary software, TMI Machine, is a text-mining platform designed with the buy-side & capital markets professional in mind, text-mining the global media to discern and quantify nuanced qualitative shifts in press coverage as they apply to macroeconomics, equity indexes/ETFs, commodities, currencies, fixed income & individual equities.  TMI provides custom leading indicators and systematic trading strategies, operating at the nexus of linguistics & statistics drawing on vast experience in investment banking and hedge fund settings in senior quantitative and fundamental roles.  

TMI Data Science was founded by Elan Gore, an award-winning Senior Global Basic Materials Equity Analyst & China Economist with 15 years of experience in North American hedge funds & institutional managers; and Alessandro Porrino, Ph.D., an Algorithmic Trading Analyst and Programmer with 10 years of front-office experience ranging from complex FX option pricing to auto-hedging strategies at Bank of America Merrill Lynch and Standard Chartered.  Mr. Gore holds an MBA in Finance from New York University Stern School of Business, and Mr. Porrino holds a Ph.D. in Systems Engineering from Brunel University London.

Quantitative Analysis

In light of recent LVMH/Tiffany headlines, we went back to TMI's Luxury Goods Sentiment Indicator and app analytics for a quick update on the state of luxury via alt-data.  TMI's Luxury Goods Sentiment Indicator has been consistently in positive territory since May, having been boosted by somewhat controversial notions of "revenge spending" popularized earlier in the pandemic with mostly anecdotal evidence.  We have also aggregated App Store data for key luxury shopping apps in key jurisdictions to find that overall App performance has been robust, aided by a recent surge in US downloads and continued growth in China, while HK and Singapore recently lag.

In light of recent LVMH/Tiffany headlines, we went back to TMI's Luxury Goods Sentiment Indicator and app analytics for a quick update on the state of luxury via alt-data.  TMI's Luxury Goods Sentiment Indicator has been consistently in positive territory since May, having been boosted by somewhat controversial notions of "revenge spending" popularized earlier in the pandemic with mostly anecdotal evidence.  We have also aggregated App Store data for key luxury shopping apps in key jurisdictions to find that overall App performance has been robust, aided by a recent surge in US downloads and continued growth in China, while HK and Singapore recently lag.

TMI Snapshot:  Luxury Goods Sentiment Steadily Positive, As App Analytics Show Ongoing Recovery

IPO and L/S equity, 2015 Starmine top stock picker, Global Equity Research Ltd

Rickin Thakrar

IPO and L/S equity, 2015 Starmine top stock picker

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

LVMH Moet Hennessy Louis Vuitton SE / Event-Driven

LVMH Moet Hennessy Louis Vuitton SE (MC FP)

In a somewhat bizarre three-paragraph press release, Bernard Arnault owned <a href="https://www.smartkarma.com/entities/lvmh-moet-hennessy-louis-vui" target="_blank" data-smartkarma-citation="entities:21072:1" rel="noopener">Lvmh (MC FP)</a> yesterday attempted to renege on its deal with <a href="https://www.smartkarma.com/entities/tiffany-co" target="_blank" data-smartkarma-citation="entities:14729:1" rel="noopener">Tiffany (TIF US)</a> on the basis that it received a letter from the French government asking it to delay its purchase until January 2021 due to strained trade relations with the US. Based on this request by the French government, LVMH stated it would not be able to complete the transaction by November 24th, the outside date in the completion documents.
Tiffany has quickly responded – filing suit in a Delaware court stating that LVMH has been ‘deliberately stalling to avoid completing the deal and saying that LVMH had ‘unclean hands.’ Tiffany has also sought an expedited ruling prior to the November 24th deadline.  
We previously argued that LVMH could accrue walkaway rights through an attempt at a regulatory delay (<a href="https://www.smartkarma.com/insights/lvmh-tiffany-could-regulatory-delays-give-lvmh-a-new-out" target="_blank" rel="noopener">LVMH/​Tiffany – Could Regulatory Delays Give LVMH a New ‘out’? )</a> However, rather than accruing these rights, we believe LVMH may have inadvertently undermined this argument by claiming it can not complete due to a request from the French government. We believe LVMH’s best argument to exit this deal was through the accrual of walkaway rights. We believe litigation surrounding these arguments will only expedite the reasoning for the regulatory delay and LVMH may not accrue rights if it is determined that LVMH caused the delay itself, and ahead of the November 24th deadline. Our updated view on the deal is below.

In a somewhat bizarre three-paragraph press release, Bernard Arnault owned Lvmh (MC FP) yesterday attempted to renege on its deal with Tiffany (TIF US) on the basis that it received a letter from the French government asking it to delay its purchase until January 2021 due to strained trade relations with the US. Based on this request by the French government, LVMH stated it would not be able to complete the transaction by November 24th, the outside date in the completion documents.
Tiffany has quickly responded – filing suit in a Delaware court stating that LVMH has been ‘deliberately stalling to avoid completing the deal and saying that LVMH had ‘unclean hands.’ Tiffany has also sought an expedited ruling prior to the November 24th deadline.  
We previously argued that LVMH could accrue walkaway rights through an attempt at a regulatory delay (LVMH/​Tiffany – Could Regulatory Delays Give LVMH a New ‘out’? ) However, rather than accruing these rights, we believe LVMH may have inadvertently undermined this argument by claiming it can not complete due to a request from the French government. We believe LVMH’s best argument to exit this deal was through the accrual of walkaway rights. We believe litigation surrounding these arguments will only expedite the reasoning for the regulatory delay and LVMH may not accrue rights if it is determined that LVMH caused the delay itself, and ahead of the November 24th deadline. Our updated view on the deal is below.

Bernard Arnault, <a href="https://www.smartkarma.com/entities/lvmh-moet-hennessy-louis-vuitton-se-unsp-adr" target="_blank" data-smartkarma-citation="entities:28477:1" rel="noopener">LVMH Moet Hennessy Louis Vuitton SE-UNSP ADR (LVMUY US)</a>'s Chairman/CEO, must rue the day his company pitched an Offer for <a href="https://www.smartkarma.com/entities/tiffany-co" target="_blank" data-smartkarma-citation="entities:14729:1" rel="noopener">Tiffany &amp; Co (TIF US)</a>, a little under two months before COVID-19 first hit the news. 
LVMH and Tiffany reached a definite agreement on the <a href="https://investor.tiffany.com/static-files/9a8842f4-4f7b-438f-a6c6-4d768c2d6546" target="_blank" rel="noopener">25 November 2019</a>, wherein LVMH would acquire Tiffany for $135/share (7.7% premium to last close) in a US$16.2bn transaction. Tiffany shareholders approved the merger on the <a href="https://investor.tiffany.com/node/22081/pdf" target="_blank" rel="noopener">4 February</a>.
The two parties had initially set August 24 as the first deadline for completing the transaction,  with the possibility of extending the deadline to November 24 at the latest (see <a href="https://www.sec.gov/Archives/edgar/data/98246/000119312519299997/d840067dex21.htm" target="_blank" rel="noopener">page 62</a> of the Merger Agreement lodged with the SEC) - one year from the initial agreement<a href="https://www.sec.gov/" target="_blank" rel="noopener">.</a> This "Outside Date" was extended to the 24 November after the merger failed to close on the 24 August.
In a very brief <a href="https://r.lvmh-static.com/uploads/2020/09/lvmh_press-release-9-september-2020.pdf" target="_blank" rel="noopener">press release</a> yesterday, LVMH said it will not be able to complete the Tiffany acquisition, in compliance with a directive from the French European and Foreign Affairs Minister to defer the merger. LVMH also said Tiffany had undergone a Material Adverse Affect (MAE).
In a strongly-worded, detailed response, Tiffany said it has no choice but to file a lawsuit to <a href="https://investor.tiffany.com/node/22406/pdf" target="_blank" rel="noopener">enforce the Merger</a>.
LVMH seeking non-compliance with its contractual obligation on account of a MAE, takes a leaf out of EQT's gameplay for <a href="https://www.smartkarma.com/entities/metlifecare-ltd" target="_blank" data-smartkarma-citation="entities:19219:1" rel="noopener">Metlifecare Ltd (MET NZ)</a>. And as in MET's case (<a href="https://skr.ma/8sLe8" target="_blank" rel="noopener">Metlifecare/EQT: The Retirement Solution</a>), LVMH may find itself having to reconsider a new Offer.
More comment below the fold.

Bernard Arnault, LVMH Moet Hennessy Louis Vuitton SE-UNSP ADR (LVMUY US)'s Chairman/CEO, must rue the day his company pitched an Offer for Tiffany &amp; Co (TIF US), a little under two months before COVID-19 first hit the news. 
LVMH and Tiffany reached a definite agreement on the 25 November 2019, wherein LVMH would acquire Tiffany for $135/share (7.7% premium to last close) in a US$16.2bn transaction. Tiffany shareholders approved the merger on the 4 February.
The two parties had initially set August 24 as the first deadline for completing the transaction,  with the possibility of extending the deadline to November 24 at the latest (see page 62 of the Merger Agreement lodged with the SEC) - one year from the initial agreement. This "Outside Date" was extended to the 24 November after the merger failed to close on the 24 August.
In a very brief press release yesterday, LVMH said it will not be able to complete the Tiffany acquisition, in compliance with a directive from the French European and Foreign Affairs Minister to defer the merger. LVMH also said Tiffany had undergone a Material Adverse Affect (MAE).
In a strongly-worded, detailed response, Tiffany said it has no choice but to file a lawsuit to enforce the Merger.
LVMH seeking non-compliance with its contractual obligation on account of a MAE, takes a leaf out of EQT's gameplay for Metlifecare Ltd (MET NZ). And as in MET's case (Metlifecare/EQT: The Retirement Solution), LVMH may find itself having to reconsider a new Offer.
More comment below the fold.

LVMH/Tiffany: In The Rough. Acts of God and Legal Restraint

The latest in the ongoing saga between buyer <a href="https://www.smartkarma.com/entities/lvmh-moet-hennessy-louis-vui" target="_blank" data-smartkarma-citation="entities:21072:1" rel="noopener">Lvmh (MC FP)</a>  and seller <a href="https://www.smartkarma.com/entities/tiffany-co" target="_blank" data-smartkarma-citation="entities:14729:1" rel="noopener">Tiffany &amp; Co (TIF US)</a> has now moved to the issue of regulatory approval. On Monday, Tiffany issued an SEC filing saying it would seek to extend its ‘outside date’ of completion to November 24, 2020 from August 24, 2020 driven by regulatory delays. However, also in the release, LVMH noted that ‘reserves the right to challenge the validity of the extension of the Outside date under the merger agreement.’ In response, Tiffany shares traded off as investors weighed the prospect of a fresh legal challenge by LVMH. We weigh the prospects of a ‘new out’ for LVMH through a lapse of regulatory approvals as well as the scope of challenging the ‘outside date’ below the fold.

The latest in the ongoing saga between buyer Lvmh (MC FP)  and seller Tiffany &amp; Co (TIF US) has now moved to the issue of regulatory approval. On Monday, Tiffany issued an SEC filing saying it would seek to extend its ‘outside date’ of completion to November 24, 2020 from August 24, 2020 driven by regulatory delays. However, also in the release, LVMH noted that ‘reserves the right to challenge the validity of the extension of the Outside date under the merger agreement.’ In response, Tiffany shares traded off as investors weighed the prospect of a fresh legal challenge by LVMH. We weigh the prospects of a ‘new out’ for LVMH through a lapse of regulatory approvals as well as the scope of challenging the ‘outside date’ below the fold. 

LVMH/Tiffany – Could Regulatory Delays Give LVMH a New 'out'?

United States

Tiffany & Co. operates jewelry stores and manufactures products through its subsidiary corporations.   The Company operates retail stores in the Americas, Asia-Pacific, Japan, Europe and the United Arab Emirates, and also engages in direct selling through Internet, catalog and business gift operations.

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Tiffany & Co (TIF US)

Last Week in Event SPACE: Vedanta, Cardinal Res., Japan Retail Fund, HSBC, Opticomm, Tiffany/LVMH

Last Week in Event SPACE ... Plus, other events, CCASS movements and Mood Spins. (This insight covers specific insights & comments...

David Blennerhassett

TMI Snapshot: Luxury Goods Sentiment Steadily Positive, As App Analytics Show Ongoing Recovery

In light of recent LVMH/TIF headlines

Elan Gore

LVMH-Tiffany: Oh Bernie, Not like This.

In a somewhat bizarre three-paragraph press release, Bernard Arnault owned LVMH yesterday attempted to renege on its deal with Tiffany on the basis...

Rickin Thakrar

LVMH/Tiffany: In The Rough. Acts of God and Legal Restraint

Taking a leaf out of the EQT's gamplay for Metlifecare Ltd (MET NZ)

David Blennerhassett

LVMH/Tiffany – Could Regulatory Delays Give LVMH a New 'out'?

The latest in the ongoing saga between buyer Lvmh (MC FP) and seller Tiffany & Co (TIF US) has now moved to the issue of regulatory approval....

Rickin Thakrar

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