PARIS (AP) — It's an ugly spat for such a glamorous industry: French luxury powerhouse LVMH and U.S. jeweler Tiffany & Co. are blaming each other for the collapse of what would have been the sector's biggest-ever buyout deal.
Paris-based LVMH had announced Wednesday it was abandoning the $14.5 billion takeover plan because the French government had requested a delay to assess the impact of proposed U.S. tariffs. Tiffany sued to enforce the deal, and on Thursday LVMH lashed back.
The Paris-based conglomerate — whose holdings including Christian Dior, Louis Vuitton, Moet & Chandon, Bulgari and Sephora — issued a statement threatening legal action of its own, accusing Tiffany of mismanaging the financial crisis prompted by virus lockdowns.
LVMH criticized Tiffany for issuing dividends even as it was losing money, and Tiffany’s performance in the first half of this year was “significantly” worse than that of other LVMH brands during the period. "LVMH confirms that the conditions are not met" to close the deal, it said.
Even before Wednesday’s announcement, the deal’s value had been eroded by wider industry troubles caused by the coronavirus pandemic, which has caused retail sales to plunge around the world.
Tiffany, based in New York, said LVMH’s argument for halting the buyout has no basis in French law, and that LVMH hadn't attempted to seek the required antitrust approval from three jurisdictions. LVMH disputed that, and said the necessary approvals were expected in October.
Tiffany, known for its delicate jewelry, distinctive blue boxes and an Audrey Hepburn movie, had been trying to transform its brand to appeal to younger and more digital shoppers. LVMH, had thought the deal would strengthen its position in high-end jewelry and in the U.S. market.
The pandemic threw all those assumptions and plans in doubt, and the threat of new tariffs between the U.S. and Europe was cited as a further complicating issue.