LVMH files countersuit against Tiffany & Co. claiming 'blatant breach' amid breakdown of huge deal
Tiffany & Co. took issue with LVMH's countersuit claims
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 LAWSUIT FOR $16B LVMH DEAL FAST-TRACKED FOR JANUARY TRIAL
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."
Two women in masks walk past the closed Tiffany & Co. Store as coronavirus (COVID-19) stay at home orders have kept most people off the streets of Manhattan on March 26, 2020 in New York City. (Photo by Gary Hershorn/Getty Images)
"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."
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| LVMUY | LVMH MOËT HENNESSY LOUIS VUITTON SE | 171.62 | -0.19 | -0.11% |
| TIF | n.a. | n.a. | n.a. | n.a. |
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.
GET FOX BUSINESS ON THE GO BY CLICKING HERE
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.
CLICK HERE TO READ MORE ON FOX BUSINESS