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Merger gone awry: LVMH and Tiffany are suing each other


Merger gone awry: LVMH and Tiffany are suing each other

By Don-Alvin Adegeest

15 Oct 2020

In November 2019 LVMH announced it was to buy American jeweller Tiffany in an unprecedented 16 billion dollar deal. The following month, the onset of the coronavirus pandemic would change the course of the retail and luxury industry, so too company valuations, and mergers and acquisitions for the unforeseeable future.

Nearly one year has passed and the deal remains in dire straights. Tiffany is currently suing LVMH for deliberately stalling on the deal, stating LVMH is backing out on the terms it agreed and is no longer willing to pay the price of 135 dollars per share.

LVMH, in turn, is countersuing, saying Tiffany is longer the business it was at the time of acquisition, paying large dividends, taking on extra debt, and mismanaging operations during the pandemic. As of today, Tiffany’s share price is valued at 119 dollars.

Tiffany said LVMH’s counterclaim is “legally and factually baseless” and accuses LVMH CEO Bernard Arnault of using “every means and opportunity at his disposal to ensure that LVMH pays the lowest possible price for the assets he desires.”

Tiffany in bid to keep original terms

Tiffany is keen to keep the original 16 billion dollar deal without renegotiating the terms. LVMH, on the other hand, is fighting the legitimacy of the deal, citing the cost of the pandemic on the business was never part of negotiations and is not theirs to cover.

Elsewhere, the European Commission is scheduled to decide on the deal by October 26 and likely give antitrust approval.

According to Reuters “the two companies had several overlaps in some areas but these are not serious enough to trigger competition concerns. The U.S. Committee on Foreign Investment and antitrust enforcers in Australia, Canada, China and South Korea have already given the green light to the deal.”

The case continues with a four-day court hearing set for 5 January 2021.

Image via Tiffany