Luxury conglomerate will allege mismanagement and breach of agreement by jewelry make
Luxury products group LVMH said today (10) it will strike back at jewelry maker Tiffany for mismanagement and breaching the terms of the takeover deal, according to a statement released a day after the conglomerate announced it was pulling out of the deal and the jeweler to position itself to force the agreement.
The counterattack is expected within a few days, according to the “New York Times”.
In the statement, LVMH said it was “surprised by the lawsuit filed by Tiffany”, which was “clearly prepared a long time ago, communicated misleadingly to shareholders and is defamatory”.
LVMH says it cannot complete the takeover on orders from the French government, which wanted the company to wait until January to close the deal instead of the original November deadline.
The French government is concerned about the threat of possible US tariffs on French luxury goods, according to the Times. Tiffany did not respond to LVMH’s countersuit on Thursday morning.
“LVMH will vigorously defend itself,” the company said in a statement. “The lengthy preparation of [Tiffany’s lawsuit] demonstrates the company’s dishonesty in its dealings with LVMH. This action is essentially based on Tiffany’s accusation that LVMH failed to take reasonably necessary steps to obtain approvals from the various regulatory authorities in a timely manner. This accusation is baseless and LVMH will demonstrate this to the Delaware Court.”
Shares in LVMH and Tiffany were up slightly, 0.68%, at open markets despite news of the counterattack. LVMH said in November 2019 that it would buy Tiffany & Co. for $16.2 billion.
Since then, the deal has been plagued by LVMH’s doubts that it was paying too much for the brand – luxury group owner and billionaire Bernaud Arnault has gone into talks with Tiffany to reduce the agreed value of $135 per share.
That attempt was abandoned, but LVMH continued to look for other ways to renegotiate the deal amid the coronavirus pandemic.
In a lawsuit filed yesterday, the jeweler argues that LVMH failed to meet its obligations to seek antitrust clearance and therefore cannot claim that Tiffany violated the merger agreement.