LVMH countersued Tiffany & Co, arguing the latter’s financial mismanagement in the Covid-19 pandemic permits the French luxury goods giant to walk away from its $16 billion acquisition of the iconic US jeweller.
The move comes after Tiffany sued LVMH earlier this month, objecting to the Paris-based company’s decision not to go through with the deal they signed last November because of a French government request and the impact of the coronavirus outbreak.
In its lawsuit filed in Delaware Chancery Court, LVMH said the agreement with Tiffany had no carve-out for pandemics under the definition of a so-called material adverse effect. As a result, Tiffany assumed the risk of a virus outbreak, LVMH added. The French company also said that Tiffany breached its agreement to operate as usual by paying out the highest possible dividend.
LVMH said it could not close the deal with Tiffany because it received a letter from the French government asking the conglomerate to delay the transaction until next year, beyond the November 24 contractual deadline that the company agreed with Tiffany for the deal to be completed.
Meanwhile, Tiffany & Co launched a new verbal broadside against LVMH, saying the French luxury giant’s justification for backing away from a $16 billion acquisition of the jeweller is baseless and misleading. “LVMH’s specious arguments are yet another blatant attempt to evade its contractual obligation to pay the agreed-upon price for Tiffany,” the jeweller’s chairman, Roger Farah, said on Tuesday.
Source: Business-Standard