The LVMH announced the abandonment of the proposed acquisition of Tiffany, which was retaliated by attacking the French luxury giant before US justice to force it to complete this operation, estimated at 16.2 billion dollars, or 13.8 billion euros.
Tiffany and LVMH, barely engaged, already divorced. Bernard Arnault’s group no longer considers itself “capable” of buying back “because it is” the American jeweler, who responded by attacking the French group in court in the United States.
Their commitment made headlines last November, when the world’s foremost in luxury announced that it wanted to bite the prestigious New York brand for a record $ 16.2 billion.
Le Drian warned LVMH of risks associated with Tiffany’s takeover
But above all, the health crisis has gone through this. After announcing at the end of August that they were pushing back by three months, until the end of November 2020, the deadline for completing their merger, LVMH announced on Wednesday, September 9, that it had decided to meet its board, “following a series of events that is likely to weaken the acquisition of the Tiffany company.
In particular, LVMH reported “a letter from the Minister for Europe and Foreign Affairs (Jean-Yves Le Drian, editor’s remark) which, in response to the threat of taxes on French products formulated by the United States, asks the LVMH group to postpone the acquisition of Tiffany after the January 6, 2021 “. This letter was sent in the context of digital tax negotiations with the United States and to point out to LVMH the risk until January 2021 of US sanctions “with a very large impact on the targeted sectors” as a luxury, a source told Reuters
“We have no choice but to apply the terms of this letter” which is “binding on LVMH”, was emphasized during a press conference, CFO of LVMH, Jean-Jacques Guiony. He added that LVMH was not happy with how Tiffany had been handled in recent months and considered its performance “weak”.
The group had previously said that they had been informed of Tiffany’s request to postpone the completion of the purchase from November 24 to December 31.“Taking these elements into account and taking into account the initial legal analyzes carried out by the councils and the LVMH groups, the board has noted (…) that in the state the LVMH group would therefore not be able to complete the acquisition of the Tiffany company,” he said. in a statement.
Justice seized in the United States
Tiffany, who brought legal action in Delaware, for her part ensures that she has respected all the terms of the agreement announced in November 2019, but on the other hand criticizes Bernard Arnault’s group for not fulfilling its own commitments, especially for requesting time. demanded the views of the competition authorities.
The jeweler also accuses LVMH of notifying him late, only Tuesday, of the letter from Quai d’Orsay dated 31 August, of which he says he has not received a copy.“We believe that LVMH will endeavor to use all necessary means to avoid terminating the transaction on the agreed terms,” Roger Farah, President of Tiffany, said in a statement.
On the Paris Bourse, the LVMH share, in the beginning of the session, went red after the group’s statements and closed slightly down 0.09% to 404.05 euros. As for Tiffany’s stock, it fell 11% on Wall Street this yearafter the publication of LVMH’s press release and loststill 6.95% around 19:15 GMT.
With AFP and Reuters