LVMH’s planned purchase of Tiffany has been the subject of speculation after the coronavirus pandemic altered the consumer landscape across the globe.

(Bloomberg)—Tiffany & Co., No. 161 in the 2020 Digital Commerce 360 Top 1000, plunged after Women’s Wear Daily reported LVMH’s $16 billion deal to buy the jeweler is uncertain as the U.S. economy faces widespread upheaval.

Board members of the French luxury giant arranged to meet Tuesday to discuss the planned acquisition, WWD reported, citing unidentified individuals. Directors are concerned about the COVID-19 pandemic that has disrupted the U.S. economy and growing unrest over police violence, the fashion publication said. They also expressed worries over Tiffany’s ability to cover its debt covenants at the end of the transaction.

Tiffany shares fell 8.9% to $117.03 Tuesday, the steepest intraday drop since 2015. LVMH, which has agreed to pay $135 a share for Tiffany, was little changed in Paris trading Wednesday.

Tiffany’s representatives didn’t immediately respond to a request for comment from Bloomberg. An LVMH representative declined to comment. LVMH is No. 7 in the Digital Commerce 360 Europe 500.

“I would imagine it is normal that LVMH internally discusses the proposed Tiffany acquisitiongiven 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.”

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Solca said it’s an “open question” whether LVMH would try to renegotiate better terms. Tiffany has dropped 12% since the French company agreed to the purchase, the biggest in the luxury-goods industry, in November. The deal was supposed to close in the middle of this year.

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’s website says that as of June 1, its stores are temporarily closed until further notice. The pandemic has also affected 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 U.S.

Virus effect

LVMH’s planned purchase of Tiffany has been the subject of speculation after the coronavirus pandemic altered the consumer landscape across the globe.

For the French company, the deal originally made strategic sense: Buying U.S.-based Tiffany would help the Louis Vuitton owner challenge Cartier parent 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.

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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 clients, though sales have been slow to rebound. CEO Alessandro Bogliolo made China a priority, counting on the market as a growth engine.

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