LVMH Moët Hennessy Louis Vuitton (LVMH) plans to file a lawsuit against Tiffany, accusing the jewelry retailer of dishonesty and mismanagement of its operations during the coronavirus pandemic. The company also stated that Tiffany’s own lawsuit, filed in response to LVMH’s cancellation of its $16.2 billion acquisition of Tiffany is “totally unfounded,” and that it has taken the necessary steps for regulatory approval of the merger in a timely fashion.
LVMH called off the purchase, which has been in the works since November 2019, because of rocky trade relations between the U.S. and France, including the prospect of tariffs being placed on French goods. However, Tiffany’s lawsuit cites that there is “no basis under French law for the Foreign Affairs Minister to order a company to breach a valid and binding agreement.” LVMH holds that Tiffany’s poor performance during 2020 “confirms that the necessary conditions for the conclusion of the acquisition of Tiffany are not fulfilled.”
“[The lawsuit] has clearly been prepared by Tiffany a long time ago and communicated in a misleading way to shareholders and is defamatory,” said LVMH in a statement. “LVMH will defend itself vigorously. The long preparation of this assignment demonstrates the dishonesty of Tiffany in its relations with LVMH.”
LVMH noted that Tiffany’s results for the first half of 2020 were “very disappointing, and significantly inferior to those of comparable brands of the LVMH Group during this period.” The luxury retailer stated that Tiffany distributed “substantial dividends” despite its losses, causing a material adverse effect on its operations.