#LVMH sues Tiffany to get out of $16 billion takeover deal

Louis Vuitton owner LVMH is escalating its efforts to wiggle out of a $16 billion takeover of Tiffany & Co. with a new lawsuit blasting the jeweler’s business prospects as “dismal” thanks to the coronavirus pandemic.

The luxury conglomerate led by French billionaire Bernard Arnault filed a new lawsuit Monday claiming that it’s entitled to back out of the blockbuster acquisition because Tiffany has suffered a “material adverse effect” from the COVID-19 crisis, which led the 183-year-old retailer to post a $65 million loss in the spring.

“The business LVMH proposed to acquire in November 2019 — Tiffany & Co., a consistently highly profitable luxury retail brand — no longer exists,” LVMH said in its counterclaim, filed in Delaware Chancery Court. “What remains is a mismanaged business that over the first half of 2020 hemorrhaged cash for the first time in a quarter century, with no end to its problems in sight.”

The lawsuit is the latest in an ugly battle that kicked off earlier this month when LVMH — whose stable of high-end brands includes Fenty and Christian Dior — claimed it could not complete its proposed merger by the Nov. 24 deadline. At the time, the French company blamed US tariffs policies for spoiling the wedding, saying the French government told it to wait until Jan. 6 of next year to close the deal in response to the US’s threat to impose tariffs on French goods.

Tiffany, popular for its engagement rings, quickly sued to stop LVMH’s from walking away from the November 2019 agreement.  A Delaware judge last week agreed to fast-track proceedings in the two companies’ legal battle. A trial is expected to start in January.

On Tuesday, the New York-based jeweler, which has blasted LVMH’s tariff claims as “excuses,” called the latest arguments “specious,” saying it has returned to profitability after a single quarter of coronavirus-fueled losses.

“LVMH’s specious arguments are yet another blatant attempt to evade its contractual obligation to pay the agreed-upon price for Tiffany,” Roger Farah, chairman of Tiffany’s board, said in a Tuesday statement.

“Had LVMH actually believed the allegations made in its complaint, there would have been no need for LVMH to procure the letter from the French Foreign Minister as an excuse for its refusal to close,” he added.

Tiffany has plenty of cash on hand and has continued to operate in an “ordinary course” of business as required, the company said.

LVMH has argued that the French government letter it cited for seeking to postpone the deal was a binding order barring it from proceeding. France’s foreign minister has said he sent the letter after his office received an inquiry from LVMH.

With Post wires