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