FRANCE. LVMH Moët Hennessy Louis Vuitton (LVMH) today announced that it will be filing a counter-lawsuit in response to the one filed by Tiffany & Co after the sudden breakdown of acquisition negotiations.
As reported, LVMH announced yesterday that it will not be completing the acquisition of Tiffany & Co, due to complications surrounding the deal. This includes a warning by the French European and Foreign Affairs minister related to the threat of taxes on French products by the US.
As a result, the US jewellery firm filed a lawsuit in the Court of Chancery of the State of Delaware yesterday, seeking an order which would require LVMH to abide by its contractual obligation to complete the transaction on the agreed terms.
In a statement today, LVMH said: “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.
“LVMH will defend itself vigorously,” the company added. “The long preparation of this assignment demonstrates the dishonesty of Tiffany in its relations with LVMH. This action is essentially based on the accusation by Tiffany that LVMH failed to take the reasonably necessary steps to obtain the various regulatory authorities’ approvals in a timely way.”
LVMH continued by saying that the filing for the agreement will continue as scheduled, denying Tiffany’s allegations that it has intentionally delayed proceedings. It said, “This accusation has no substance and LVMH will demonstrate this to the Delaware Court. On this matter, the filing in Brussels will 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. It is legitimate to expect this authorisation will be obtained in October.”
According to LVMH, the Board examined Tiffany & Co’s current economic situation and its mismanagement of the COVID-19 crisis. “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,” said the company.
LVMH also stressed that the period is impacted by a Material Adverse Effect and that the US jewellery house did not follow an ordinary course of business. According to LVMH, Tiffany & Co distributed substantial dividends when the company was making a loss and so the operations and organisation of the company have been severely destabilised.
This statement is in direct response to Tiffany & Co’s comment yesterday saying that LVMH was in breach of contractual obligations.
Tiffany said that the lawsuit “not only makes clear that LVMH is in breach of its obligations relating to obtaining antitrust clearance, but also refutes LVMH’s suggestions that it can avoid completing the acquisition by claiming Tiffany has undergone a Material Adverse Effect or breached its obligations under the Merger Agreement, or that the transaction is in some way inconsistent with its patriotic duties as a French corporation.”
