Tiffany & Co. launched a new verbal blitz on LVMH, saying the French luxury giant’s justification for backing down on the jeweler’s $ 16 billion acquisition is unfounded and misleading.
The response came after LVMH attacked Tiffany on Monday, weeks after taking steps to finalize the purchase of the iconic New York-based brand. The Louis Vuitton owner said the decision was prompted by the French government’s request to delay closing the deal and Tiffany’s mismanagement during the pandemic, a claim that the jeweler dismissed as nonsense.
“LVMH’s misleading arguments are another blatant attempt to circumvent its contractual obligation to pay the price agreed to by Tiffany,” the jeweler’s president, Roger Farah, said in a statement on Tuesday.
Tiffany rejected the French company’s claim of a significant adverse effect that would justify terminating the deal. He said fourth-quarter earnings are on track to be higher than a year earlier and rejected LVMH’s suggestion that it is at risk of defaulting on debt agreements.
In its counterclaims, LVMH also cited a letter from French Foreign Minister Jean-Yves Le Drian, requesting a delay in closing the transaction as part of a trade war with the United States. The letter amounts to a “legal restriction” under the terms of the purchase that prohibits the deal from closing before the November 24 deadline, LVMH attorneys noted in the 96-page filing.
Judge Joseph Slights III has scheduled a bench trial on January 5 to decide whether LVMH should consummate the deal.
Le Drian called the controversy surrounding his letter “excessive” on Sunday. “As for the transatlantic situation, the commercial disagreements we have are known. Therefore, it was my role to inform LVMH of my political assessment at that time. “
Bloomberg News reported on September 10 that Le Drian wrote the letter after LVMH Chief Executive Bernard Arnault leaned on the government to exit the acquisition.
LVMH said Tiffany’s losses related to the COVID-19 pandemic are more significant than those suffered by the luxury retailer during the 2008 financial crisis. “The business LVMH proposed to acquire in November 2019” no longer exists, it said the French company in its counterclaim.
