Tiffany and Co. Sues Louis Vuitton Over Failed Acquisition Deal
Vivian Haas
International Business Writer
Tiffany and Co. announced that they are suing French Company Moët Hennessy Louis Vuitton SE (LVMH) on Wednesday September 9th. This began on November 25th, 2019, when LVMH had approval from their board of directors to carry out the plan of acquiring Tiffany & Co. for $16.2 billion. Bernard Arnault, Chairman and Chief Executive Officer of LVMH, stated that LVMH is delighted to have the opportunity to welcome Tiffany to the LVMH family and they look forward to ensuring that Tiffany continues to thrive. However, the board of directors at LVMH received a letter form the French foreign ministry that stated that they wanted the company to delay the acquisition of Tiffany & Co. France’s foreign minister, Jean-Yves Le Drian, wrote to Arnault, that the countries efforts are to defend its national interests and requested that LVMH delay the merger until January 6, 2021. The cause? The threat of additional U.S. tariffs against French products.
Although LVMH states that they are prohibited from closing the deal, the French government deems the letter to be advisory and not binding. Still, analysts were skeptical that France is using this deal to have leverage in the trade disputes with the U.S. As a result of the French government being very active in defending its national interest, most company acquisitions have been stunted. On the other hand, due to the pandemic, Tiffany’s worldwide sales fell 29% in three months ending July 31st, which could be a huge factor towards the delay or annulment of the acquisition.
In the lawsuit filed by Tiffany & Co., the company refuted LVMH’s suggestion that it could pull out of the deal due to a breach in its obligations under the merger agreement, or that Tiffany is inconsistent with its patriotic duties as a French corporation. In addition, Tiffany claimed that LVMH was dragging its feet for filing for regulatory approval in the European Union, Japan, and Taiwan despite previous claims of getting the acquisition underway. The biggest blow to Tiffany occurred when the deal was pending completion– LVMH asked Tiffany to stop dividend payouts to shareholders. As a result, Tiffany is asking the court to force LVMH to pay for damages or close the deal.
Despite the lawsuit with Tiffany and LVMH, many other companies in the retail sector have had to renegotiate or abandon mergers and acquisitions that were agreed upon before the pandemic took place. The pandemic has created massive damages in the economy and will continue to negatively affect businesses.
Contact Vivian at haasvivi@shu.edu