Acquisition gone kaput! Tiffany & Co. to sue LVMH as the latter cancels a $16.2bn mega deal

By Malvika Mistry

on September 10, 2020

After the news of a delay until late November, the luxury goods giant, Louis Vuitton Moet Hennessy (LVMH) has dropped out of its much-hyped acquisition of Tiffany & Co. This $16.2bn deal was quoted as ‘luxury’s biggest ever deal’ and was expected to close in November. However, the luxury giant ended the takeover stating that the French government had requested a delay to assess the threat of proposed U.S. tariffs.

In an official statement, LVMH stated that “The Board learned of a letter from the French European and Foreign Affairs Minister which, in reaction to the threat of taxes on French products by the US, directed the Group to differ the acquisition of Tiffany until after January 6, 2021. Furthermore, the Board noted Tiffany & Co.’s requested to extend the ‘Outside Date’ in the Merger Agreement from November 24th to December 31, 2020.”

The statement further clarified that the Board had decided to follow the original Merger Agreement signed back in 2019 that stated the deadline won’t extend further than November 24, 2020. “as it stands, Group LVMH will therefore not be able to complete the acquisition of Tiffany & Co.” the statement concluded.

In response to the merger cancellation, Tiffany & Co. announced that it has filed a lawsuit for not honoring the agreement. “We regret having to take this action but LVMH has left us no choice but to commence litigation to protect our company and our shareholder, Tiffany is confident it has complied with all of its obligations under the Merger Agreement and is committed to completing the transaction on the terms agreed to last year. Tiffany expects the same of LVMH” said Roger N. Farah, chairman of the board, in a statement as stated by the online website, HypeBeast.

Tiffany’s suit expects of LVMH to fulfill the contractual obligations and complete the agreed-upon deal stated in its initial agreement from November 2019. “The fundamental strength of Tiffany’s business is clear. The company has already returned to profitability after just one-quarter of losses, and we expect our earnings in the fourth quarter of 2020 will actually exceed the same period in 2019,” stated Alessandro Bogliolo, Tiffany’s chief executive officer.

Well, what are your thoughts about this?

(Source- HypeBeast)