Tiffany & Co. Fifth Avenue Store | Source: Shutterstock
PARIS, France — It was meant to be the biggest deal in the history of the modern luxury industry. It isn’t happening.
After months of speculation, LVMH has called off its planned mega-merger with American jeweller Tiffany & Co. The break up has not been amicable. Tiffany is suing the French luxury conglomerate controlled by billionaire Bernard Arnault.
The $16 billion deal has looked dicey for months. Rumours that it might not go ahead as planned emerged as early as March, as the pandemic began to batter the luxury sector, which is set to shrink by as much as 35 percent this year, according to Bain.
LVMH issued statements to diffuse speculation that it planned to buy the jeweller’s shares on the open market, a strategy that could have potentially helped it negotiate a better price for Tiffany in light of the decline in its stock price.
But behind the scenes, the company was allegedly dragging its feet in obtaining necessary regulatory permissions in a bid to renegotiate the terms of the deal, according to a Tiffany press release outlining the lawsuit it filed against LVMH in Delaware Wednesday.
The lawsuit was first reported by The Financial Times, shortly before LVMH issued a statement saying it would not proceed with the acquisition. The French conglomerate cited “recent developments” including a request from France’s Foreign Affairs Ministry to delay past the deal’s closing deadline due to a US plan to impose tariffs on a variety of French and European goods. Tiffany is claiming it was only made aware of this latest development on Tuesday and that it is not grounds to stop the transaction.
“We believe that LVMH will seek to use any available means in an attempt to avoid closing the transaction on the agreed terms,” Tiffany Chairman Roger Farah said in a statement.
The jeweller is seeking to legally compel the French conglomerate to see the deal through, hoping for an expedited ruling on the matter in advance of November 24, the date by which the deal was meant to close.
The high-profile unravelling is an ugly twist in a deal that had seemed set to rewire the luxury market. It scuppers LVMH’s long-held ambitions to transform its hard luxury division to rival Richemont, and will slow plans to expand in the US market.
LVMH CEO Arnault is no stranger to hardball tactics. He sued Gucci relentlessly to try to block its takeover by rival billionaire Francois Pinault. But usually he’s fought to acquire assets–never to back out of a deal.
Stay tuned for BoF updates to this developing story.
Disclosure: LVMH is part of a group of investors who, together, hold a minority interest in The Business of Fashion. All investors have signed shareholders’ documentation guaranteeing BoF’s complete editorial independence.