By Sarah White and Jessica DiNapoli

PARIS/NEW YORK (Reuters) – A war of words between LVMH and Tiffany escalated on Tuesday with the French group describing Tiffany’s prospects as “dismal” and the U.S. jeweller accusing LVMH of improperly trying to renegotiate a takeover deal.

The Louis Vuitton owner’s $16 billion purchase of Tiffany <TIF.N> came close to collapse this month after LVMH <LVMH.PA> said it could not complete the deal by a Nov. 24 deadline, triggering a legal battle.

LVMH cited an official foreign ministry request to delay closing the deal to January, following trade tensions with the United States and worsening business conditions at Tiffany because of the coronavirus emergency.

Tiffany, in turn, sued LVMH in a Delaware court, accusing it of deliberately stalling completion of the deal, which was agreed last year before the pandemic emerged. It is seeking a court order to force LVMH to honour the original deal and a four-day trial is scheduled to begin on Jan. 5.

On Monday, LVMH filed its countersuit, detailing its accusation that Tiffany was mismanaged during the pandemic.

It described the U.S. jeweller’s prospects as “dismal” and said its decision to cut marketing expenses, take on additional debt and pay regular dividends despite the crisis meant it was a different company from the one LVMH had agreed to buy.

“The business LVMH proposed to acquire in November 2019 -Tiffany & Co, a consistently highly-profitable luxury retail brand, no longer exists,” LVMH said in the document.

LVMH’s argument is that the pandemic provides a “material adverse effect” allowing it to walk away from the contract.

It also said Tiffany stands to profit “far more” if the deal proceeds than as a standalone company. Tiffany’s top five executives are in line to receive at least $100 million in total compensation if

By Sarah White and Jessica DiNapoli

PARIS/NEW YORK (Reuters) – A war of words between LVMH and Tiffany escalated on Tuesday with the French group describing Tiffany’s prospects as “dismal” and the U.S. jeweller accusing LVMH of improperly trying to renegotiate a takeover deal.

The Louis Vuitton owner’s $16 billion purchase of Tiffany

came close to collapse this month after LVMH

said it could not complete the deal by a Nov. 24 deadline, triggering a legal battle.

LVMH cited an official foreign ministry request to delay closing the deal to January, following trade tensions with the United States and worsening business conditions at Tiffany because of the coronavirus emergency.

Tiffany, in turn, sued LVMH in a Delaware court, accusing it of deliberately stalling completion of the deal, which was agreed last year before the pandemic emerged. It is seeking a court order to force LVMH to honour the original deal and a four-day trial is scheduled to begin on Jan. 5.

On Monday, LVMH filed its countersuit, detailing its accusation that Tiffany was mismanaged during the pandemic.

It described the U.S. jeweller’s prospects as “dismal” and said its decision to cut marketing expenses, take on additional debt and pay regular dividends despite the crisis meant it was a different company from the one LVMH had agreed to buy.

“The business LVMH proposed to acquire in November 2019 -Tiffany & Co, a consistently highly-profitable luxury retail brand, no longer exists,” LVMH said in the document.

LVMH’s argument is that the pandemic provides a “material adverse effect” allowing it to walk away from the contract.

It also said Tiffany stands to profit “far more” if the deal proceeds than as a standalone company. Tiffany’s top five executives are in line to receive at least $100 million in total compensation if the deal

Updated


NEW YORK (AP) — Luxury conglomerate LVMH Moët Hennessy Louis Vuitton SE has filed a countersuit against Tiffany over their ruined merger deal, noting conditions necessary to close the $16.2 billion acquisition of the jewelry chain have not been met.

It also noted in a statement that the “spurious arguments put forward by Tiffany are completely unfounded.”

The lawsuit, filed late Monday

  • LVMH countersued Tiffany on Monday, and said it remains confident that it can walk away from its $16 billion takeover of the US jeweler. 
  • Tiffany breached the agreement by paying out the highest possible dividends during the pandemic, French luxury goods conglomerate LVMH claimed in the countersuit.
  • A letter to LVMH from the French government also made it “impossible” to close the deal before the deadline, it added.
  • But Tiffany called the counterclaims “baseless and misleading,” and claims that LVMH breached the merger agreement.
  • Visit Business Insider’s homepage for more stories.

French luxury goods giant LVMH countersued Tiffany & Co on Monday, and still has “full confidence” it can walk away from a proposed $16 billion merger because of the US jeweler’s financial mismanagement during the pandemic, it said in a statement on Tuesday.

LVMH said that Tiffany didn’t consider the risk of a viral outbreak when it made the deal, and paid out the highest possible dividends while it was making losses during the pandemic — something “no other luxury company in the world did,” it claimed.

Tiffany called LVMH’s counterclaims “baseless and misleading,” and said LVMH simply wanted to avoid paying the agreed $16 billion price for Tiffany. It said it was within its rights to make the dividend payments, and said LVMH had violated the merger agreement by contacting the French government.

The countersuit comes after Tiffany sued LVMH on September 9, arguing that the French conglomerate deliberately delayed antitrust proceedings so it wouldn’t have to go through with the deal it signed in November 2019. LVMH had said it couldn’t close the deal with Tiffany because it received a letter from the French government asking it to delay the transaction until January 2021, which was beyond the acquisition’s November 24 contractual deadline.

LVMH: “Impossible” to close

LVMH walked away from its $16.2 billion offer to buy Tiffany this month after claiming a series of poor decisions by Tiffany’s board since the deal was unveiled late last year


Johannes EISELE

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French behemoth LVMH said Tuesday that it had filed a countersuit against the American jewellery brand Tiffany, setting up an unusual legal fight after the collapse of one of the biggest luxury takeover bids in decades.

LVMH walked away from its $16.2 billion offer this month after claiming a series of poor decisions by Tiffany’s board since the deal was unveiled late last year.

It also cited a letter from the French foreign ministry that purportedly asked for a delay to the tie-up because of political uncertainties caused by the long-running trade war between the EU and Washington.

Tiffany rubbished the claims and sued to force LVMH to go through with its bid, and a US court in Delaware, where many US firms are incorporated, approved a fast-track trial set to begin in January.

The court also urged the two sides to try to work out a settlement, but an escalating war of words makes that prospect unlikely.

“LVMH continues to have full confidence in its position that the conditions necessary to close the acquisition of Tiffany have not been met and that the spurious arguments put forward by Tiffany are completely unfounded,” the French firm, by far the world’s largest luxury conglomerate, said Tuesday.

It again accused Tiffany of “mismanagement” by paying high dividends, investing when it should have been conserving cash because of the Covid-19 pandemic, and taking on too much debt.

Tiffany refused to comment when contacted by AFP in New York on Monday, after a report of LVMH’s countersuit was published by Bloomberg News.

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