(Bloomberg) — Tiffany & Co. plunged after Women’s Wear Daily reported LVMH’s deal to buy the luxury jewelry company is uncertain as the U.S. economy faces widespread upheaval.LVMH board members arranged to meet on Tuesday to discuss the proposed deal, WWD reported, citing unidentified individuals. Board members are concerned about the Covid-19 pandemic that has disrupted the U.S. economy and growing unrest over police violence, WWD said. They also expressed concern about Tiffany’s ability to cover its debt covenants at the end of the transaction.Tiffany’s representatives didn’t immediately respond to a request for comment from Bloomberg. LVMH declined to comment. The French company’s shares rose 0.8% in early Paris trading Wednesday.Tiffany shares, which were halted for several minutes due to volatility, fell as much as 13%, the steepest intraday drop since 2015, before closing down 8.9% on Tuesday.“I would imagine it is normal that LVMH internally discusses the proposed Tiffany acquisition — given the size of the deal, the Covid-19 situation, and the recent social unrest in the U.S.,” wrote Luca Solca, an analyst at Sanford C. Bernstein. “Having said that, the Tiffany takeover would provide a unique strategic opportunity to LVMH, boosting its position in branded jewelry.”Solca said it’s an “open question” whether LVMH would try to renegotiate better terms.The economic fallout from the pandemic has disrupted or derailed a number of prominent deals, including L Brands Inc.’s agreement to sell a majority stake in Victoria’s Secret to private-equity firm Sycamore Partners. If the LVMH-Tiffany tie-up falls apart, it would be one of the largest so far related to Covid-19.The New York-based jeweler website says, as of June 1, its stores are temporarily closed until further notice. The pandemic has also impacted the company’s ability to offer next-day and express shipping.The stores went dark in mid-March due to the pandemic shutdown. Some of its locations have had their windows boarded up as protests roil cities across the country.LVMH’s planned purchase of Tiffany for more than $16 billion has been the subject of speculation after the coronavirus pandemic suddenly altered the consumer landscape across the globe.For LVMH, the deal originally made a lot of sense: buying U.S.-based Tiffany would help the Louis Vuitton owner challenge Cartier owner Richemont for dominance in the global jewelry business. But as Americans curb discretionary spending and retail stores temporarily close their doors, growing exposure to the U.S. market doesn’t have quite the same appeal as it did when the tie-up was announced last November.Prior to the virus lockdown, the 183-year-old Tiffany was struggling with a lull in international tourist traffic and civil unrest in Hong Kong. In the U.S., management has worked to attract younger clientele, though sales have been slow to rebound. Chief Executive Officer Alessandro Bogliolo made China a priority, counting on the market as a growth engine.(Updates with LVMH shares in third paragraph, analyst comment in fifth)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

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(Bloomberg) — Deutsche Lufthansa AG signaled the start of a company-wide revamp spanning job cuts to asset disposals to help repay its 9 billion-euro ($10 billion) bailout from the German government.Europe’s biggest airline will slash employee expenses and look at spinning off non-core units in an effort to reduce costs and bolster cash flow as the coronavirus crisis depresses revenue, it said in a statement Wednesday. The group had a 2.1 billion-euro net loss in the first quarter.“In view of the very slow recovery in demand, we must now take far-reaching restructuring measures to counteract this,” Chief Executive Officer Carsten Spohr said in the release.Lufthansa’s pledge to slash costs is likely to lead to a struggle with Germany’s powerful labor unions, which in the years prior to the pandemic thwarted efforts to trim expenses with pilot and cabin-crew strikes. The situation may be complicated by the state’s 20% holding in the airline as part of the pending rescue, which will involve government representatives in its affairs.The company set out more precise cuts for its foreign airline units, where labor protection laws are less stringent than in Germany. Austrian Airlines will see staff costs pared by 20%, with Brussels Airlines suffering a 25% reduction in the workforce and a 30% cut to its fleet.While Lufthansa has said its liquidity position is becoming “urgent,” the statement gave no details on cash levels. The deal will dilute the holdings of current investors, though they’re expected to back it in a June 25 vote rather than risk insolvency.Airlines worldwide are reeling as the Covid-19 pandemic brings decades of travel growth to a shuddering halt, with industry executives suggesting it may take several years for demand to return to previous levels, especially in the long-haul markets targeted by premium carriers such as Lufthansa.At the same time the German carrier, previously regarded as among the most stable and successful, is negotiating bailout that’s the biggest for the industry so far. Its predicament highlighs both the impact of the virus and Germany’s willingness to come to the aid of its leading businesses.Lufthansa posted a first-quarter loss of 1.22 billion euros, widening from 336 million euros a year earlier. The imposition of travel lockdowns from mid-February led to an 18% drop in sales, with fuel-hedging losses also hurting the numbers.The picture will be far worse in the current quarter, during which almost all of the carrier’s 760 planes have been grounded.Spohr said it’s impossible to provide full-year guidance, beyond saying the result will be significantly worse.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

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