FRANCE. LVMH Moët Hennessy Louis Vuitton (LVMH) said today that it will not be completing the acquisition of Tiffany & Co, due to complications surrounding the deal. Tiffany & Co has filed a lawsuit to try to enforce the deal (see below).
As reported, the French luxury powerhouse was set to acquire the famed jewellery house in a record €14.7 billion or US$16.2 billion deal. The acquisition was intended to strengthen LVMH’s position in jewellery and further increase its presence in the US.
LVMH said that its board had received a letter from the French European and Foreign Affairs Minister advising the company to defer the acquisition until after 6 January 2021. This, it said, was related to the threat of taxes on French products by the US.
LVMH also noted the US jewellery house’s request to extend the ‘Outside Date’ in the Merger Agreement from 24 November to 31 December 2020.
The original merger agreement had stated that the deal must be completed by 24 November. LVMH said that, taking into account legal analysis led by its advisors and the LVMH teams, the board decided to stick to the terms of the deal as outlined. This in turn means that “as it stands, LVMH will therefore not be able to complete the acquisition of Tiffany & Co,” it said.
But Tiffany & Co today announced that it has filed a lawsuit in the Court of Chancery of the State of Delaware against LVMH. It seeks an order requiring LVMH to abide by its contractual obligation under the Merger Agreement to complete the transaction on the agreed terms.
According to Tiffany & Co, 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.”
It said that the Merger Agreement provided for an initial outside date of 24 August, extendable to 24 November if antitrust clearances were all that remained outstanding. Tiffany & Co said that the extended date is now less than three months away, and that LVMH still has not filed formal requests for antitrust approval in the European Union or Taiwan, and applications are still outstanding in Japan and Mexico. It claimed that these were due to “LVMH’s concerted efforts to delay or avoid receipt of regulatory approvals in those jurisdictions in breach of the Merger Agreement”.
Chairman of the Board Roger Farah said, “We regret having to take this action but LVMH has left us no choice but to commence litigation to protect our company and our shareholders. Tiffany is confident it has complied with all of its obligations under the Merger Agreement and is committed to completing the transaction on the terms agreed to last year. Tiffany expects the same of LVMH.”
Chief Executive Officer Alessandro Bogliolo said, “The fundamental strength of Tiffany’s business is clear. The company has already returned to profitability after just one quarter of losses, and we expect our earnings in the fourth quarter of 2020 will actually exceed the same period in 2019.”
