Tiffany sues LVMH for reneging on US$16 billion deal as France steps in

PARIS/NEW YORK: Tiffany & Co sued LVMH on Wednesday after the French luxury goods giant told the U.S. jeweler it could not complete a US$16 billion deal to acquire it because of a French government request and the impact of the coronavirus outbreak.

"The deal cannot happen. We are prohibited from closing the deal," LVMH finance chief Jean Jacques Guiony told reporters on a conference call. Bloomberg News reported, citing a source it did not identify, that Arnault asked for help from the French government to pull out of the deal with Tiffany, but Guiony said the letter was unsolicited and came as a total surprise to LVMH.

The pandemic's financial fallout has made the deal's price tag less attractive to LVMH. Tiffany's worldwide sales fell 29per cent to US$747.1 million in the three months ended July 31, missing expectations of US$772 million. Guiony on Wednesday called Tiffany's financial performance in recent months"lackluster."

It said LVMH was dragging its feet when it came to filing for regulatory approval of the deal in the European Union, Taiwan and Japan. Sources familiar with LVMH's plans said the company planned to file for EU approval within days. LVMH has thus far let its deal contract with Tiffany remain in place. Tiffany is asking the Delaware court to force LVMH to comply with its obligations to close the deal or pay damages. LVMH had not responded to Tiffany's lawsuit with a court filing as of Wednesday afternoon.The luxury industry is facing an unprecedented sales slump as a result of the pandemic, after a decade of stellar growth, with revenue expected to fall by as much as 35per cent this year.

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