(COMBO/FILES) This combination of file photographs created on October 28, 2019, shows (L) the logo of the French luxury goods group LVMH in Paris on September 12, 2002 and (R) The logo of US luxury jewelry and specialty retailer Tiffany & Co. in Venice, north-eastern Italy, on February 17, 2019. - On September 9, 2020, LVMH said it was 'not in a position' to buy Tiffany , according to a press release issued after its Board of Directors meeting. (Photos by Martin BUREAU and Vincenzo PINTO / AFP)
LVMH to counter-sue Tiffany for ‘dishonesty’
Agence France-Presse / 04:17 AM September 11, 2020
PARIS — French luxury giant LVMH accused US jeweler Tiffany of “dishonesty” Thursday, saying it would do battle in court as plans for a sparkling tie-up descended into bitter recrimination.
“LVMH was surprised by the lawsuit filed by Tiffany,” the French owner of brands such as Louis Vuitton, Dior and Moet & Chandon said in a statement.
“LVMH considers that this action is totally unfounded. It has clearly been prepared by Tiffany a long time ago and communicated in a misleading way to shareholders and is defamatory.
“The long preparation of this assignment demonstrates the dishonesty of Tiffany in its relations with LVMH,” it added.
The French firm vowed to “defend itself vigorously” against Tiffany’s accusation that it had failed to seek regulatory approvals for the planned $16.2 billion acquisition in a timely manner.
LVMH also said it had been able to examine Tiffany’s current economic situation — the coronavirus pandemic has weighed heavily on the luxury sector — and its management of a crisis that has hammered its market value.
The French group “noted that the first-half results and its perspectives for 2020 are very disappointing, and significantly inferior to those of comparable brands of the LVMH group during this period.”
It thus “confirms that the necessary conditions for the conclusion of the acquisition of Tiffany are not fulfilled.”
After LVMH called off the acquisition, Tiffany vowed to take legal action to push the deal through.
The French group said Wednesday that its board had decided not to proceed with the deal following “a succession of events which undermine the acquisition of Tiffany & Co,” notably US threats to slap tariffs on French products.
It said that a letter from French Foreign Minister Jean-Yves Le Drian directed it to defer the deal in reaction to Washington’s tax threat and also noted that Tiffany had requested an extension to the closing date of the merger.
LVMH also says that Tiffany paid out large dividends while making losses, which has affected its operations and organisation.
Tiffany’s market value is now much less than when the deal was signed.
Tiffany’s riposte was to accuse LVMH of breaching “obligations relating to obtaining antitrust clearance” for the deal.
Board chairman Roger Farah charged that LVMH was using “any available means” to avoid closing the transaction on the agreed terms.
But for LVMH, essential regulatory filings with EU authorities would take place “as expected, in the following days and this is simply the result of the planning fixed by the European Commission, about which Tiffany is completely aware.
A source close to the matter told AFP: “All this shows that relations with Tiffany are affected long-term, if not broken altogether.”
Shares prices of the two companies were stable Thursday as Tiffany gave up just 0.1 percent to $113.91 in late New York trading while LVMH was essentially unchanged at 404.35 euros.
LVMH had agreed to pay around $135 a share for Tiffany, but they traded for around $122 ahead of the LVMH announcement on Wednesday.