French luxury giant LVMH and US jeweller Tiffany buried the hatchet in their bitter takeover battle on Thursday, agreeing to lower the price of the merger so that it can finally go ahead.

Tiffany agreed to accept a lower price from LVMH in order to seal a deal that had been closed to collapsing, the French group said in a statement.

"LVMH, the world's leading luxury products group, and Tiffany, the global luxury jeweller, today announced that they have concluded an agreement modifying certain terms of their initial agreement to reflect a purchase price of $131.50 (per share) in cash and to reduce closing conditionality," the statement said.

"Other key terms of the merger agreement remain unchanged."

Previously, the price of the deal had been set at $135 per share.

At the revised share price, the value of the deal will be around $15.77 billion, a decline of about $425 million based on Tiffany's share count in US securities documents.

The parent to luxury brands such as Louis Vuitton, Dior and Moet & Chandon, LVMH announced its plan to acquire Tiffany and its iconic robin's egg blue gift boxes at the end of 2019.

But the French company walked away from its proposal last month after claiming a series of poor decisions by Tiffany's board since the deal was unveiled late last year.

Tiffany has said there was no valid basis to call off the deal and lodged a complaint in a Delaware court, while LVMH responded with a counter-claim.

The US court has set a trial date of January 5, 2021, while a judge in Delaware has urged talks between the parties to avoid litigation.

"This balanced agreement with Tiffany's board allows LVMH to work on the Tiffany acquisition with confidence and resume discussions with Tiffany's management on the integration details," said LVMH chief executive Bernard Arnault.

"We are as convinced as ever of the formidable potential of the Tiffany brand and believe that LVMH is the right home for Tiffany and its employees during this exciting next chapter."

Tiffany's board chairman Roger Farah said: "We are very pleased to have reached an agreement with LVMH at an attractive price and to now be able to proceed with the merger. The board concluded it was in the best interests of all of our stakeholders to achieve certainty of closing."

The deal is expected to be closed in January.