LVMH and Tiffany find themselves in the midst of a bitter dispute that has escalated into a full-blown war of words. The French luxury conglomerate has taken a harsh stance toward Tiffany, painting a grim picture of the jeweler’s prospects while accusing them of trying to improperly renegotiate the terms of their acquisition deal.
The $16 billion deal that would see LVMH taking over Tiffany was thrown into jeopardy when LVMH cited a request from the French foreign ministry to delay the completion of the deal until January. This request was justified by trade tensions and the economic fallout of the global pandemic on Tiffany’s business operations. In response, Tiffany took legal action against LVMH, claiming that the delay was a deliberate attempt to sabotage the deal agreed upon prior to the pandemic.
As tensions continued to rise, LVMH fired back with a countersuit, alleging mismanagement on Tiffany’s part during the pandemic. They argued that Tiffany’s decisions to cut back on marketing spending, take on more debt, and issue dividends during a crisis constituted a breach of the agreed-upon terms of the deal. LVMH argued that these actions represented a “material adverse effect,” giving them grounds to walk away.
Tiffany defended its actions, stating that they were acting in the best interests of their shareholders and accusing LVMH of trying to shirk their obligations. The legal battle between the two parties is set to go to trial starting on January 5.
Despite the current impasse, industry analysts believe that there is still potential for negotiation at a revised price lower than the initial $135 per share agreed upon. Progress has been made in overcoming competition hurdles, with LVMH receiving approval from antitrust regulators in Taiwan. The European Union’s ruling on the matter is anticipated in October.
The ongoing dispute between LVMH and Tiffany serves as a stark reminder of the challenges faced by luxury companies in the wake of a global pandemic. As the legal drama unfolds, the fate of the acquisition deal hangs in the balance, with both sides and industry insiders anxiously awaiting a resolution.
For further insight into the ongoing legal battle between LVMH and Tiffany, you can visit here. And for a deeper look into the impact of the pandemic on the luxury industry, check out this article here.
