At a time when the pandemic is reshaping the luxury industry, LVMH Moët Hennessy Louis Vuitton SE indicated on Wednesday (Sept. 9) it is withdrawing from a $16.2 billion acquisition of Tiffany & Co., The Wall Street Journal reported.
The luxury goods firm contended that the government of France and the American jewelry firm requested the deal be postponed to after the closing date that is permissible under the agreement, the newspaper reported.
The final date for finishing the transaction was Nov. 24 under the merger deal. However, Tiffany and LVMH had consented to delay the deadline set at first to Nov. 24 from Aug. 24.
LVMH, however, indicated that the foreign ministry of France had requested in a letter that the firm postpone the deal to beyond Jan. 6 of next year due to the potentiality of American trade tariffs. It also claimed that Tiffany requested that the deal be postponed to Dec. 31, 2020.
Tiffany indicated on Wednesday (Sept. 9) that it filed a suit in Delaware to have the deal upheld and contended that LVMH was harnessing the letter as an excuse to withdraw from the agreement.
“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 per WSJ. “But the simple facts are that there is no basis under French law for the Foreign Affairs Minister to order a company to breach a valid and binding agreement.”
The news comes as it was reported in June that LVMH was mulling walking back its arrangement to buy Tiffany & Co. for $16.2 billion because of the impact of COVID-19 and recent U.S. social unrest have had on retail.
The deal was agreed upon in November, 2019; however, it was still going through regulatory approval per news at the time.
In November, LVMH CEO Bernard Arnault said Tiffany would "thrive for centuries to come" under the management of his firm.