(Bloomberg)—LVMH (No. 8 in the Digital Commerce 360 Europe 500) said it plans to file a lawsuit against Tiffany & Co.(No. 161 in the 2020 Digital Commerce 360 Top 1000) to challenge its management during the pandemic crisis, marking the latest twist in the unraveling of the luxury industry’s biggest takeover.
LVMH moved Wednesday to call off a $16 billion purchase of Tiffany, with the Louis Vuitton owner saying the French government requested that it delay the deal for reasons related to a U.S.-France trade dispute.
Tiffany countered with a lawsuit, filed in Delaware, that LVMH was trying to leverage the protests against police brutality and the COVID-19 pandemic to seek a lower price. Tiffany said in its suit that the government’s request to LVMH for a delay in the closing date has no basis in French law, and that the real goal is to renegotiate the merger price and “run out the clock.”
The luxury conglomerate said in a statement Thursday that Tiffany’s performance since the start of the year and its perspectives going forward were “very disappointing.” LVMH in particular criticized Tiffany’s payment of dividends at a time when the company was “loss making.”
“This accusation has no substance and LVMH will demonstrate this to the Delaware Court,” the luxury giant said, adding that it will file for an approval with the EU Commission in “the following days,” and expects this authorization to be granted next month.Led by Chairman Bernard Arnault, France’s wealthiest man, LVMH also defended itself against Tiffany’s accusations that it used delaying tactics, notably with competition authorities in Europe, in seeking the deal’s approval.
The tit-for-tat developments show how acrimonious the relationship between the companies has become after months of uncertainty over LVMH’s determination to go ahead with the deal once the coronavirus altered the economic landscape.
Arnault asked for help from the French government in an effort to pull out of the transaction, according to a person familiar with the government’s thinking.
LVMH denied what a spokesman called “malicious and totally unfounded” allegations.Favorite