US jeweller Tiffany & Co. has filed a lawsuit against luxury goods conglomerate LVMH Moët Hennessy Louis Vuitton for abandoning its planned $16 billion takeover deal.
The companies, two of the biggest luxury goods groups in the world, were slated to merge later this year before LVMH issued a statement claiming that “a succession of events” left the group unable to acquire Tiffany.
“The board learned of a letter from the French European and foreign affairs minister which, in reaction to the threat of taxes on French products by the US, directed the group to defer the acquisition of Tiffany until after 6 January 2021,” LVMH said in the statement, adding that Tiffany had also pushed for the completion date to be delayed until 31 December.
LVMH claimed that the requested delays prevented the deal from being fulfilled due to a previous agreement stating that the acquisition must be completed no later than 24 November.
Tiffany rejected LVMH’s claim, accusing the group of deliberately stalling to avoid completing the deal. “The simple facts are that there is no basis under French law for the foreign affairs minister to order a company to breach a valid and binding agreement,” said Tiffany chair Roger Farah.
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Tiffany filed suit against LVMH in Delaware, the state where the group is registered, to force it to complete the deal outlined in 2019.
“LVMH was surprised by the lawsuit filed by Tiffany against the group,” the company said in a Thursday statement, describing the suit as “unfounded”. “LVMH will defend itself vigorously.”
The group said that it would also lodge its claim in Delaware, and that the suit would challenge the way in which Tiffany managed its business during the COVID-19 pandemic, particularly in its payout of dividends. It will also file its requests to European competition authorities in the coming days.
