The French luxury group Louis Vuitton Moët Hennessy (LVMH) wants to call off the proposed acquisition of the American jewellery chain Tiffany & Co. It concerns a deal worth more than 14.7 billion euros. LVMH points to delays in the acquisition process due to possible new US import laws.
In a response, Tiffany has announced legal action against LVMH. The chain accuses the French company of wanting to pay a lower price than agreed.
The corona crisis and the collapsed economy put the deal at risk. Sales of luxury products fell drastically. LVMH therefore now considers the original price too high, report insiders to the Financial Times.
LMVH claims that the French government has asked the company in a letter to postpone the takeover until the beginning of next year, when new US import duties may apply to French goods. As a result, according to LMVH, the agreed deadline of 24 November this year cannot be met. Incidentally, the letter from the French government has not been made public.
So Tiffany doesn’t leave it at that and wants to enforce the merger through an American court. In a statement, the jewelry chain LVMH accuses it of using the lockdown and social unrest in the United States to force a lower price.
In November last year, the takeover was already announced and approved by Tiffany’s shareholders. LVMH is the world’s largest luxury goods conglomerate. Its brands include Moët, Marc Jacobs, Dior, Louis Vuitton and Givency.
The French LVMH, led by top man Bernard Arnault, wanted to expand on the American market. The acquisition of Tiffany & Co. played an important role in this. In November last year, Arnault said he was pleased with the acquisition of Tiffany, which he believes holds a unique position in the jewellery world: “We are proud that Tiffany will be added to our other iconic brands and look forward to making the brand prosper for centuries to come
This is not the first major acquisition this year where the buyer is trying to get a better price. Spectacles giant EssilorLuxottica announced last year its intention to acquire a majority stake of Pearle owner GrandVision for some 5.5 billion euros.
Since the coronacrisis the relationship has deteriorated and there are suspicions that EssilorLuxottica wants to take advantage of the coronacrisis to get better conditions or a lower price out of the deal. GrandVision, like Tiffany, filed a lawsuit because it wants to make sure the takeover goes through.