Tiffany & Co. sued LVMH for backing out of the merger deal, alleging breach of agreement.
Tiffany & Co. filed a lawsuit against luxury goods company LVMH. The move comes as the French company backed out of its planned purchase of Tiffany & Co. Consequently, the American jeweler brought the matter to court.
The Supposed Merger of LVMH and Tiffany
Last year in November, the French company LVMH said it would acquire Tiffany & Co. The reported price of the deal amounted to $16 billion. But decisions apparently changed on Wednesday, when the French conglomerate opted out of its plan to merge with the jeweler company.
LVMH will no longer complete its takeover of storied American jeweler Tiffany & Co. “as it stands,” while the jeweler is suing LVMH for a breach of its obligations https://t.co/TIHRZPMttq pic.twitter.com/PA4JNzp7jJ
— Forbes (@Forbes) September 9, 2020
According to LVMH, the French foreign ministry asked the company to hold the transaction until January next year. The request comes because of the dispute in trades between the US and France. The disagreement could result in a possible imposition of tariffs on French products.
Meanwhile, Tiffany & Co. also asked to postpone the deal, moving it from November 24 to December 31, LVMH said in a press release.
Tiffany Co. Sues LVMH
In that case, the French company’s board decided to back out of the deal. LVMH wrote in a statement that it stands with the original agreement signed in 2019.
Tiffany & Co. responded with a lawsuit filed in Delaware. According to Tiffany, LVMH breached an agreement between the two companies. The American jeweler wants LVMH to proceed with the deal. Tiffany even noted that the Bernard Arnault-led company’s claims have no legal basis.
Furthermore, Tiffany also said LVMH had not filed for approval from anti-trust regulators in several important jurisdictions. Because of such, Tiffany decided to push out the extension to November further. But still, Tiffany said LVMH still would not ask for regulatory approval despite the extension.
Protecting the Company
“We regret having to take this action,” Tiffany’s board chairman Roger Farah stated. “But LVMH has left us no choice but to commence litigation to protect our company and our shareholders.”
Furthermore, Tiffany’s chief executive Alessandro Bogliolo noted that the company “already returned to profitability after just one quarter of losses.” He added that the company even expects better earnings in the fourth quarter than the same period in 2019.