Moët Hennessy Louis Vuitton is to ‘vigorously defend itself’ following the filing of a lawsuit by Tiffany & Co. News of the lawsuit, filed in the Court of Chancery of the State of Delaware emerged after the Group revealed yesterday (9 December) it was unable to complete the $16.2 billion acquisition of the luxury jeweller.

In a statement issued today (10 September) the Group said: “LVMH was surprised by the lawsuit filed by Tiffany against the Group. LVMH considers that this action is totally unfounded. It has clearly been prepared by Tiffany a long time ago, communicated in a misleading way to shareholders and is defamatory.

“LVMH will defend itself vigorously. The long preparation of this assignment demonstrates the dishonesty of Tiffany in its relations with LVMH.

The lawsuit is essentially based on Tiffany’s belief that LVMH failed to take the necessary steps to obtain the various regulatory approvals to complete the acquisition in a timely manner.

“This accusation has no substance and LVMH will demonstrate this to the Delaware Court. On this matter, the filing in Brussels will take place, as expected, in the following days and this is simply the result of the planning fixed by the European Commission, about which Tiffany is completely aware. It is legitimate to expect this authorisation will be obtained in October,” LVMH added.

‘DISAPPOINTING’ FIRST HALF TIFFANY RESULTS

Elaborating on the Group’s decision not to finalise the acquisition, today’s statement added: “The LVMH Board, besides the elements already raised, had the opportunity to examine the current economic situation of Tiffany and its management of the [Covid-19] crisis. It noted that the first half results and its perspectives for 2020 were very disappointing and significantly inferior to those of comparable LVMH brands during this period.

“LVMH will be therefore led to challenge the handling of the crisis by Tiffany’s management and its Board of Directors. LVMH considers, among other things, that this period is impacted by a material adverse effect, that Tiffany did not follow an ordinary course of business, notably in distributing substantial dividends when the company was loss making and that the operation and organisation of this company are not substantially intact.

“LVMH therefore confirms that the necessary conditions for the conclusion of the acquisition of Tiffany are not fulfilled.”

A statement from the Group yesterday, initially revealing it was unable to complete the acquisition read: “After a succession of events which undermine the acquisition of Tiffany & Co, the Board of LVMH met to review the situation relating to the contemplated investment in light of these recent developments.

“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 defer the acquisition of Tiffany until after 6 January 2021.

“Furthermore, the Board noted Tiffany & Co.’s request to extend the ‘outside date’ in the merger agreement from 24 November to 31 December 2020.”

“As a result of these elements and knowledge of the first legal analysis led by the advisors and LVMH teams, the Board decided to comply with the merger agreement signed in November 2019. The agreement provides for a closing deadline of 24 November 2020 and officially records that LVMH will be unable to complete the acquisition at present.

Luxury goods conglomerate LVMH announced in November a plan to acquire the global luxury jeweller for $16.2 billion.“

The purchase at $135 per share was approved by shareholders in February 2020, amid reports casting doubt on the buyout in the face of economic turmoil in the US.

In June, LVMH revealed it was not entertaining the purchase of shares in Tiffany & Co and was focusing on the development of the coronavirus pandemic.