LVMH Pulls Out of Tiffany Takeover -- 3rd Update
By Matthew Dalton and Suzanne Kapner
PARIS -- Luxury-goods giant LVMH Moët Hennessy Louis Vuitton SE
said Wednesday it was backing out of its $16.2 billion takeover of
Tiffany & Co, in a sign of how trade tensions and the
coronavirus pandemic have taken the air out of the highflying
LVMH said it no longer wanted to buy Tiffany because the deal
was being dragged into the middle of trade disputes between France
and the Trump administration. The conglomerate said it had received
a letter from the French foreign ministry asking it to delay the
acquisition until Jan. 6, 2021, more than a month after the closing
date stipulated in the merger agreement. The companies had already
agreed to push back the deadline for completing the deal from Aug.
24 to Nov. 24.
LVMH said the French government was seeking the delay in
response to tariffs Washington has threatened to impose on French
On Wednesday Tiffany accused LVMH of using the letter from the
French government as a pretext to back out of a deal that had lost
much of its luster since the pandemic changed the economics of the
luxury industry. The U.S. jeweler said it has filed a lawsuit in
Delaware, where key LVMH U.S. subsidiaries are based, to enforce
"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. "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."
Jean-Jacques Guiony, LVMH's chief financial officer, said it
considered the French government's demand a valid, legally-binding
order. "We have no other choice but to apply this decision," he
A spokeswoman for the French foreign ministry didn't immediately
respond to a request for comment.
The agreement allows Tiffany to pay a termination fee of $575
million to walk away from the deal, but LVMH doesn't have the
option of paying to back out. LVMH and Tiffany had already agreed
to push back the deadline for completing the deal from Aug. 24 to
Over the summer, Bernard Arnault, chief executive and
controlling shareholder of LVMH, began reviewing whether to move
forward with the deal, according to a person familiar with the
matter. But analysts said the agreement signed between the two
companies appeared to give Mr. Arnault little leeway to back
Tiffany said LVMH hadn't sought approval for the merger in
several key jurisdictions, including the European Union, making
finalization of the deal difficult before Nov. 24. LVMH said
Tiffany has asked to extend the deadline for the acquisition until
Dec. 31 of this year. A person close to Tiffany said the jeweler
never asked for a delay beyond the Nov. 24 deadline.
Paris and Washington have been locked in a trans-Atlantic
tit-for-tat over trade for more than a year. France has been at the
forefront of countries, including the U.K., Italy and Spain, that
are pursuing plans to tax digital companies, such as Alphabet Inc.
and Facebook Inc. The U.S. in turn has threatened to impose
retaliatory tariffs on any country that implements such a tax.
Luxury goods have been targeted by Washington as part of the
long-running U.S.-EU dispute over subsidies for Boeing Co. and
The deal's unraveling also shows how the coronavirus pandemic is
reshaping the luxury industry. Brands have long relied on
big-spending tourists from China and the U.S. to splurge on
handbags and other goods while visiting Paris, Milan and other
destinations. That business model is under threat as countries
maintain travel restrictions, and perennial travelers shy away from
The plan to acquire the American jeweler was the biggest ever
attempted by Bernard Arnault, chief executive and controlling
shareholder of LVMH. The deal, completed shortly before the
coronavirus pandemic threw the luxury-goods market into turmoil,
was part of Mr. Arnault's ambition to expand its jewelry business,
which was one of the fastest-growing sectors in luxury.
After approaching Tiffany in October 2019 with an all-cash
takeover worth about $120 a share, LVMH paid close to Tiffany's
all-time-high share price to acquire the company in November 2019.
Tiffany shares have fallen well below LVMH's $135 offer price since
the pandemic hit. Tiffany's stock fell 9.9% in early trading
Write to Matthew Dalton at Matthew.Dalton@wsj.com and Suzanne
Kapner at Suzanne.Kapner@wsj.com
(END) Dow Jones Newswires
September 09, 2020 10:13 ET (14:13 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
Historical Stock Chart
From Sep 2020 to Oct 2020
Historical Stock Chart
From Oct 2019 to Oct 2020