LVMH (OTCMKTS: LVMUY) announced Tuesday it had filed a countersuit against Tiffany after retracing from the USD16.2 Billion deal to acquire the luxury jeweler. France’s LVMH expressed it would not be going through with the transaction “as it stands.”
The lawsuit, which was filed on Monday in Delaware, states that LVMH “continues to have full confidence in its position that the conditions necessary to close the acquisition of Tiffany have not been met.” It adds that the “spurious arguments put forward by Tiffany are completely unfounded.”
After citing the threat of U.S. tariffs on French goods and with Tiffany delaying the deal deadline, the Louis Vuitton owner decided to back out. Ultimately causing Tiffany to instantly file a lawsuit in Delaware to enforce the deal, stating that the demand from the French Government had no legal footing.
Nevertheless, the lawsuit filed by LVMH, references the coronavirus pandemic saying that it has caused a “material adverse effect.” Additionally it pointed out the jewelers “mismanagement of its business,” which it says is a breach of its duties in itself.
“For instance, Tiffany paid the highest possible dividends while the company was burning cash and reporting losses. No other luxury company in the world did so during this crisis. There are many examples of mismanagement detailed in the filing, including slashing capital and marketing investments and taking on additional debt,” LVMH’s statement Tuesday said.
Tiffany on the other hand responded by saying that LVMH had provided no evidence of its accusations.
Tiffany Chair Roger Farah said in a press release: “LVMH’s specious arguments are yet another blatant attempt to evade its contractual obligation to pay the agreed-upon price for Tiffany. Tiffany has acted in full compliance with the Merger Agreement, and we are confident the Court will agree at trial and require specific performance by LVMH.”