French luxury brand group LVMH filed a countersuit Monday against Tiffany & Co., after announcing earlier in September that LVMH was backing out of what was expected to be a historic $16.2 billion deal.
The "conditions necessary to close the acquisition of Tiffany have not been met" for several reasons, including a letter from the French minister of Europe and Foreign Affairs asking for the deal to be delayed, LVMH said in a statement Tuesday.
Tiffany & Co. sued LVMH earlier in September after the acquisition broke down, prompting LVMH to vow to countersue. LVMH's countersuit claims that it has an out because the coronavirus pandemic has had a "devastating and lasting" material adverse effect on Tiffany & Co.'s business, and the two companies' deal did not contain a pandemic carveout.
LVMH also accused Tiffany & Co. of a "blatant breach of its obligation to operate in the ordinary course."
"For instance, Tiffany paid the highest possible dividends while the company was burning cash and reporting losses," LVMH said in a statement, although Tiffany & Co. counters that it has never missed or reduced dividend payments and has more than $1.2 billion in cash.
Tiffany & Co. pushed back against other claims made by LVMH on Tuesday.
"LVMH’s specious arguments are yet another blatant attempt to evade its contractual obligation to pay the agreed-upon price for Tiffany," Roger Farah, the chairman of Tiffany & Co.'s board, said in a statement. "Tiffany has acted in full compliance with the Merger Agreement, and we are confident the Court will agree at trial and require specific performance by LVMH."
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LVMH has not provided Tiffany & Co. or the court with a copy of the French minister's letter, which was signed after solicitation from LVMH, a fact that LVMH initially obscured, Tiffany & Co. said in a statement.
The pandemic has not devastated Tiffany & Co.'s business either, the iconic jeweler said.
"Tiffany experienced a single quarter of losses before returning to profitability and projects fourth-quarter earnings in 2020 greater than those in the same period in 2019," Tiffany & Co. said in a statement.