Asks Delaware Court to Require LVMH to Abide
by Contractual Obligation to Complete Transaction
Says French Government Request That LVMH
Delay Closing Has No Basis In French Law
Tiffany & Co. (NYSE:TIF) today announced that it has filed a
lawsuit in the Court of Chancery of the State of Delaware against
LVMH Moët Hennessy-Louis Vuitton SE and related entities
(“LVMH”).
The lawsuit relates to the November 24, 2019 Merger Agreement
between Tiffany and LVMH providing for the acquisition of Tiffany
by LVMH and seeks, among other things, an order requiring LVMH to
abide by its contractual obligation under the Merger Agreement to
complete the transaction on the agreed terms.
The lawsuit not only makes clear that LVMH is in breach of its
obligations relating to obtaining antitrust clearance, but also
refutes LVMH’s suggestions that it can avoid completing the
acquisition by claiming Tiffany has undergone a Material Adverse
Effect (“MAE”) or breached its obligations under the Merger
Agreement, or that the transaction is in some way inconsistent with
its patriotic duties as a French corporation.
Under the terms of the Merger Agreement, LVMH assumed all
antitrust-clearance risk and all financial risk related to adverse
industry trends or economic conditions. In addition, LVMH is
required to do everything necessary to secure all required
regulatory clearances as promptly as practicable.
The Merger Agreement provided for an initial outside date of
August 24, 2020, which the parties agreed at signing would provide
for more than sufficient time to obtain all the required regulatory
clearances, because the transaction does not pose any substantive
antitrust concerns. The Merger Agreement also gives either party
the option to unilaterally extend the outside date to November 24,
2020 if antitrust clearances are the only remaining condition to
closing at August 24, 2020.
As of August 24, 2020, LVMH had not even filed for antitrust
approval in three of the required jurisdictions. Because all other
conditions to closing were met on that date, Tiffany elected to
extend the outside date to November 24, 2020. However, this
extended outside date is now less than three months away, and LVMH
still has not filed formal requests for antitrust approval in the
European Union or Taiwan, and applications are still outstanding in
Japan and Mexico, all due to LVMH’s concerted efforts to delay or
avoid receipt of regulatory approvals in those jurisdictions in
breach of the Merger Agreement.
Roger N. Farah, Chairman of
the Board, said, “We regret having to take this action but LVMH has
left us no choice but to commence litigation to protect our company
and our shareholders. Tiffany is confident it has complied with all
of its obligations under the Merger Agreement and is committed to
completing the transaction on the terms agreed to last year.
Tiffany expects the same of LVMH.”
Chief Executive Officer Alessandro Bogliolo said, “The
fundamental strength of Tiffany’s business is clear. The company
has already returned to profitability after just one quarter of
losses, and we expect our earnings in the fourth quarter of 2020
will actually exceed the same period in 2019.”
The COVID-19 pandemic has not prevented other parties from
making antitrust filings on a timely schedule. Among the ten
largest transactions announced since the beginning of the fourth
quarter of 2019, this is the only transaction that has not yet
formally filed for antitrust approval in the European Union. All
nine other transactions filed formal notifications with the EU
between March 27 and July 7.
In response to Tiffany’s valid extension of the outside date,
LVMH claimed to reserve its rights to challenge Tiffany’s
extension. Yesterday, LVMH for the first time advised Tiffany of
the existence of a letter, dated August 31, 2020, that LVMH
purportedly received from the Ministre de l’Europe et des Affaires
Etrangéres. LVMH has not provided Tiffany with a copy of the
letter, but an English translation provided by LVMH states that
“the American government has decided to implement an additional
customs duty on the import of certain French goods, in particular
goods in the luxury sector” and that LVMH “should defer the closing
of the pending Tiffany transaction until January 6, 2021” in order
to support the French Foreign Affairs Minister’s stated intent to
“take measures in order to dissuade the American authorities from
putting these tariff sanctions into effect.”
Roger Farah stated, “We believe that LVMH will seek to use any
available means in an attempt to avoid closing the transaction on
the agreed terms. 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, and LVMH's
unilateral discussions with the French government without notifying
or consulting with Tiffany and its counsel were a further breach of
LVMH’s obligations under the Merger Agreement. Moreover, this
supposed official French effort to retaliate against the U.S. for
proposed new tariffs has never been announced or discussed
publicly; how could it possibly then be an effort to pressure the
U.S. into revoking the tariffs? Furthermore, as we are not aware of
any other French company receiving such a request, it is all the
more clear that LVMH has unclean hands.”
Despite having no contractual basis
to do so, LVMH has advised Tiffany that it intends to honor this
request from the French government to refuse to close the
transaction until January 6, 2021, while also informing Tiffany
that LVMH will not extend the outside date under the Merger
Agreement beyond November 24, 2020, effectively stating that LVMH
no longer intends to complete the transaction. In addition, LVMH
has asserted there has been a Material Adverse Effect and a breach
by Tiffany of the Merger Agreement, which LVMH suggested could give
it the option to seek to terminate the Merger Agreement. LVMH did
not provide any basis for these assertions.
The Merger Agreement does not excuse
LVMH from completing the merger merely because a government
minister has requested that LVMH breach the Merger Agreement.
Further, Tiffany believes this latest development represents
nothing more than LVMH’s most recent effort to avoid its obligation
to complete the transaction on the agreed terms, not dissimilar
from LVMH’s baseless, opportunistic attempts to use the U.S. social
justice protests and the COVID-19 pandemic to avoid paying the
agreed price for Tiffany shares. The Material Adverse Effect clause
in the Merger Agreement is narrowly defined and, notwithstanding
LVMH’s focus on the COVID-19 pandemic and the U.S. social justice
protests, the impact of these events cannot even be taken into
account in determining whether an MAE has occurred under the Merger
Agreement. In fact, during the pandemic, Tiffany’s financial
results compare favorably with those of other firms in the luxury
goods industry, including LVMH itself. Tiffany has been a
responsible steward of its business, all the while taking great
care to protect the health and safety of its customers and
employees.
Tiffany is seeking to expedite the
Delaware proceedings to obtain a ruling prior to November 24, 2020
ordering LVMH to comply with its obligations and complete the
transaction on the agreed terms.
About Tiffany & Co.
In 1837, Charles Lewis Tiffany founded his company in New York
City where his store was soon acclaimed as the palace of jewels for
its exceptional gemstones. Since then, TIFFANY & CO. has become
synonymous with elegance, innovative design, fine craftsmanship and
creative excellence. During the 20th century, its fame thrived
worldwide with store network expansion and continuous cultural
relevance, as exemplified by Truman Capote’s Breakfast at Tiffany’s
and the film starring Audrey Hepburn.
Today, with more than 14,000 employees, TIFFANY & CO. and
its subsidiaries design, manufacture and market jewelry, watches
and luxury accessories - including nearly 5,000 skilled artisans
who cut diamonds and craft jewelry in the Company’s workshops,
realizing its commitment to superlative quality. TIFFANY & CO.
has a long-standing commitment to conducting its business
responsibly, sustaining the natural environment, prioritizing
diversity and inclusion, and positively impacting the communities
in which we operate.
The Company operates more than 300 TIFFANY & CO. retail
stores worldwide as part of its omni-channel approach. To learn
more about TIFFANY & CO., as well as its commitment to
sustainability, please visit www.tiffany.com.
Forward-Looking Statements:
Certain statements in this release including, without
limitation, statements relating to the merger and conditions to
closing of the merger, may constitute “forward-looking statements”
within the meaning of Section 27A of the Securities Act of 1933,
Section 21E of the Securities Exchange Act of 1934 and the Private
Securities Litigation Reform Act of 1995, each as amended.
Forward-looking statements by their nature address matters that
are, to different degrees, uncertain, such as statements about the
consummation of the merger and the anticipated benefits thereof.
Forward-looking statements provide current expectations of future
events and include any statement that does not directly relate to
any historical or current fact. Words such as “anticipates,”
“believes,” “expects,” “intends,” “plans,” “projects,” “may,”
“will,” or other similar expressions may identify such
forward-looking statements.
These and other forward-looking statements are not guarantees of
future results and are subject to risks, uncertainties and
assumptions that could cause actual results to differ materially
from those discussed in forward-looking statements, including, as a
result of factors, risks and uncertainties over which we have no
control. The inclusion of such statements should not be regarded as
a representation that any plans, estimates or expectations will be
achieved. You should not place undue reliance on such statements.
Important factors, risks and uncertainties that could cause actual
results to differ materially from such plans, estimates or
expectations include, but are not limited to, the following: (i)
conditions to the completion of the merger may not be satisfied or
the regulatory approvals required for the merger may not be
obtained, in each case, on the terms expected or on the anticipated
schedule; (ii) the occurrence of any event, change or other
circumstance that could give rise to the termination of the Merger
Agreement or affect the ability of the parties to recognize the
benefits of the merger; (iii) the effect of the announcement or
pendency of the merger on Tiffany’s business relationships,
operating results, and business generally; (iv) risks that the
merger disrupts Tiffany’s current plans and operations and
potential difficulties in Tiffany’s employee retention; (v) risks
that the merger may divert management’s attention from Tiffany’s
ongoing business operations; (vi) potential litigation that may be
instituted against Tiffany or its directors or officers related to
the merger or the Merger Agreement and any adverse outcome of any
such potential litigation; (vii) the amount of the costs, fees,
expenses and other charges related to the merger, including in the
event of any unexpected delays; (viii) other risks to consummation
of the merger, including the risk that the merger will not be
consummated within the expected time period, or at all, which may
affect Tiffany’s business and the price of the common stock of
Tiffany; (ix) any adverse effects on Tiffany by other general
industry, economic, business and/or competitive factors; (x) the
outbreak and geographic spread of the novel coronavirus (COVID-19)
and changes in financial, business, travel and tourism, political,
public health and other conditions, circumstances, requirements and
practices resulting therefrom; (xi) the protest activity in the
U.S.; and (xii) such other factors as are set forth in Tiffany’s
periodic public filings with the SEC, including but not limited to
those described under the headings “Risk Factors” and “Forward
Looking Statements” in its most recently filed Form 10-Q for the
quarter ended July 31, 2020, its Form 10-K for the fiscal year
ended January 31, 2020, the definitive proxy statement on Schedule
14A, filed with the SEC on January 6, 2020, and in its other
filings made with the SEC from time to time, which are available
via the SEC’s website at www.sec.gov. Consequences of material
differences in results as compared with those anticipated in the
forward-looking statements could include, among other things,
business disruption, operational problems, financial loss, legal
liability to third parties and similar risks, any of which could
have a material adverse effect on Tiffany’s financial condition,
results of operations, credit rating, liquidity or stock price. In
addition, there can be no assurance that the merger will be
completed, or if it is completed, that it will close in the
timeframe previously anticipated, or that the expected benefits of
the merger will be realized.
Forward-looking statements reflect the views and assumptions of
management as of the date of this release with respect to future
events. Tiffany does not undertake, and hereby disclaims, any
obligation, unless required to do so by applicable securities laws,
to update any forward-looking statements as a result of new
information, future events or other factors. The inclusion of any
statement in this release does not constitute an admission by
Tiffany or any other person that the events or circumstances
described in such statement are material.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200909005532/en/
Jason Wong (973) 254-7612 jason.wong@tiffany.com
Tiffany (NYSE:TIF)
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