LVMH fights fast-tracking Tiffany’s suit over busted deal2 min read . Updated: 17 Sep 2020, 07:00 AM IST
- Friction between LVMH and Tiffany emerged in March as the depth of the economic fallout from the pandemic became apparent
- Tensions have only risen since then, culminating in LVMH’s move earlier this month to cancel the purchase, citing a letter from the French government
LVMH and Tiffany & Co. are escalating their fight over fast-tracking a lawsuit aimed at preventing the owner of bag-maker Louis Vuitton from pulling out of a $16 billion buyout of the luxury jewelry brand.Earlier this week, a judge set a Sept. 21 hearing on Tiffany’s request to get an expedited ruling on whether LVMH had proper legal grounds for torpedoing the deal -- purportedly at the request of the French government.
Tiffany said Wednesday that LVMH’s filing in Delaware Chancery Court that opposes fast-tracking -- which wasn’t publicly available after business hours -- was another attempt by the would-be buyer to “run out the clock" on the deal. The transaction has a Nov. 24 deadline.“If LVMH were confident in its legal position, it would have no reason to oppose an expedited trial schedule," Tiffany Chairman Roger Farah said in a statement. LVMH representatives weren’t immediately available to comment on the filing.
Friction between LVMH and Tiffany emerged in March as the depth of the economic fallout from the pandemic became apparent. Tensions have only risen since then, culminating in LVMH’s move earlier this month to cancel the purchase, citing a letter from the French government. LVMH has lambasted the jewelry company’s response to Covid-19 and had pledged to file a lawsuit against it.
Tiffany counters in its court filings that LVMH sought to leverage police-brutality protests in the U.S. and a declining luxury market during the pandemic to negotiate a lower deal price.
Results released in late August showed that Tiffany returned to profitability in the second quarter after posting a loss in the previous period. Global net sales fell 29% in the quarter ended July 31, an improvement from the 45% drop in the first quarter, as China sales recovered and Tiffany’s e-commerce business helped offset a sharp decline in demand.
As the deal unravels, LVMH has criticized Tiffany’s performance, saying its prospects were “very disappointing." The conglomerate, which owns the Moet & Chandon and Christian Dior brands, in particular criticized dividends paid at a time when the company was “loss making."
High-end goods from handbags to diamonds have been hit hard by the pandemic, which has halted tourism and tightened wallets worldwide. Luxury sellers could see as much as $100 billion in sales evaporate in 2020 and the industry may not fully recover for at least two more years, according to a report earlier this year from Bain & Co.
The case is Tiffany & Co. v. LVMH Moet-Hennessy-Louis Vuitton SE, 2020-0768, Delaware Chancery Court (Dover).