The French luxury powerhouse LVMH is currently in the midst of a legal battle with American jeweler Tiffany over the collapse of their planned acquisition deal. LVMH, known for its prestigious brands such as Louis Vuitton and Christian Dior, has vehemently denied any wrongdoing and has promised to defend itself vigorously in court against Tiffany’s accusations of “dishonesty”.
In a strongly-worded statement, LVMH expressed shock at Tiffany’s decision to sue, claiming that the lawsuit was baseless and intentionally misleading. The French conglomerate called into question Tiffany’s financial stability, pointing to poor financial results in the first half of the year and the challenging economic climate caused by the global pandemic.
The luxury sector has been severely impacted by the COVID-19 crisis, leading to uncertainties and setbacks for companies like Tiffany and LVMH. Despite these challenges, LVMH made the difficult decision to abandon the acquisition deal, citing various factors such as potential US tariffs on French goods and concerns over Tiffany’s financial practices, including substantial dividend payments amid losses.
On the other hand, Tiffany has accused LVMH of breaching its obligations related to obtaining antitrust clearance for the acquisition. Board chairman Roger Farah blasted LVMH for allegedly seeking ways to evade closing the agreement as originally planned, painting a picture of a company attempting to wriggle out of its commitments.
Despite the legal showdown between the two luxury giants, investors seem relatively unfazed as both companies saw stable stock prices on Thursday. Tiffany’s shares experienced a slight drop to $113.91, while LVMH’s stock remained steady at 404.35 euros. What was once seen as a promising partnership with a significant acquisition deal now hangs in the balance as LVMH and Tiffany navigate the fallout of their failed agreement.
For more information on the luxury industry and legal battles within it, click here. To learn about the impact of COVID-19 on the luxury sector, check out this article here.
