Tiffany, the American luxury retailer, will sue LVMH (Moët Hennessy Louis Vuitton), the world’s largest luxury group.
The decision follows France based LVMH’s announcement that it is abandoning a proposed $16 billion merger due to US tariffs on French goods.
Today both companies issued statements where LVMH said it was withdrawing its offer to buy Tiffany while Tiffany said it had filed a lawsuit forcing the giant of luxury to move forward with its offer.
If the deal had come through, it would have been the biggest acquisition in the luxury sector.
For months, there has been concern that LVMH would seek to renegotiate the deal announced last November, given the stress the pandemic has placed on the jewelry business.
In a statement, LVMH stated that it could not complete the deal “as it stands,” citing a request from the French government to postpone the deal beyond January 6, 2021, due to the threat of US tariffs on French goods.
Tiffany’s lawsuit claims LVMH is in breach of its antitrust clearance contract. It rejects the idea that LVMH can avoid the deal by claiming that Tiffany has been subjected to a “material adverse effect” which would have infringed its obligations under the deal.
Tiffany argues that there is no contractual basis for LVMH to appease the French government’s request to refuse to close the transaction until January 6, 2021.
A person familiar with the deal said that Tiffany decided to sue LVMH due to frustration that it had not yet filed for antitrust approval in the European Union even 10 months after the agreement.
Antitrust Approval means any consent, approval or other authorization required under the applicable Antitrust Laws from the concerned Antitrust Authority in the country.
Tiffany acquisition would have made LVMH a major player in the so-called hard luxury sector and has been called ‘a genius move’ by the experts.
Hard luxury is the industry label given for the watch and jewelry products.
The collapse of the agreement comes at a when there is a sharp decline in the luxury goods industry globally, as the COVID-19 pandemic led countries seeking to contain the pandemic by imposing lock downs and restrictions on movement.
