In 2019, LVMH had reached an agreement to buy the New York jeweler for 14.7 billion euros. It highlights “a succession of events likely to weaken the operation“.
On Wednesday, September 9, LVMH announced the abandonment of the proposed acquisition of Tiffany & Co. The French group, which in November 2019 had undertaken to purchase the New York jeweler for approximately 14.7 billion euros, explained in a press release that “after a series of events that could weaken the acquisition of Tiffany & Co.” the Board of Directors of LVMH met to “study the situation of the planned investment in light of recent developments“.
Chaired by Bernard Arnault, the Board was “informed of a letter from the Minister of Europe and Foreign Affairs (Jean-Yves Le Drian), who, in response to the threat of taxes on French products from the United States, asked the LVMH Group to defer the acquisition of Tiffany beyond January 6, 2021“.
“The agreement cannot take place. We are prohibited from entering into the agreement,” said Jean-Jacques Guiony, the Group’s Chief Financial Officer, at a press conference call. He added that LVMH was not satisfied with the way Tiffany & Co. had been managed in recent months, judging its performance to be “lackluster“. The group had previously stated that it had been informed of the jeweler’s request to postpone the completion of the buyout from November 24 to December 31.
Delaware courts seized
The Tiffany & Co. group, which has decided to sue the LVMH group, has filed a lawsuit in Delaware and assures that it has complied with all the terms of the agreement announced in November 2019, but criticizes Bernard Arnault’s group for not honoring its own commitments, in particular to seek the opinions of the competition authorities within the necessary timeframe.
“Bad faith,” Mr. Guiony cried out, with regard to the European Union in particular. According to him, Tiffany & Co, which is associated with it, knows very well that the proceedings are in an “extremely classic antitrust situation“.
Tiffany & Co. also accuses LVMH of having informed it late, only on Tuesday, of this letter from the French Ministry of Foreign Affairs dated August 31, a copy of which it says it did not obtain. “We believe that LVMH will seek to use all necessary means to try to avoid concluding the transaction on the agreed terms,” said Roger Farah, president of Tiffany & Co. quoted in a statement.
Tiffany & Co. suffered from the closure of its stores due to containment measures, recording a net loss of $65 million between February and April, compared to a profit of $125 million a year earlier.
French government spokesman Gabriel Attal also announced that Le Drian would soon address the issue in detail. “In a context of very important international negotiations with our partners, the French government is neither naive nor passive,” he added.