French Say LVMH Asked Help on Deal -- WSJ
Officials' account adds wrinkle to saga of why firm backed out
of Tiffany takeover
By Noemie Bisserbe and Matthew Dalton
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (September 18, 2020).
PARIS -- LVMH Moët Hennessy Louis Vuitton SE asked the top
negotiator in France's tax talks with the U.S. for help in backing
out of its agreement to take over Tiffany & Co., and was turned
down, according to senior French officials.
Such outreach, to French Finance Minister Bruno Le Maire, adds a
new wrinkle to the luxury conglomerate's account of why it nixed
its $16.2 billion planned acquisition of Tiffany -- specifically,
its contention that the French government was a driving force in
LVMH said it never reached out to Mr. Le Maire. "LVMH denies
these malicious and completely unfounded accusations," it said.
Last week, LVMH said it was forced to abandon the deal after
receiving a letter from a different French official, Foreign
Minister Jean-Yves Le Drian, that the luxury-goods company said was
unsolicited and legally binding. The letter, dated Aug. 31, said
LVMH should delay its purchase of Tiffany until January, saying the
move would strengthen France's hand in tax and trade negotiations
with the U.S.
French officials said LVMH reached out to Mr. Le Maire about the
Tiffany acquisition before Mr. Le Drian sent his letter. The
company -- owner of Louis Vuitton, Dior and other brands -- asked
Mr. Le Maire to write a letter laying the grounds for LVMH to
renegotiate or pull out of the merger agreement, the French
Mr. Le Maire refused, the officials said. Mr. Le Maire was
engaged in discussions with U.S. Treasury Secretary Steven Mnuchin
over France's new tax on digital companies such as Facebook Inc.
and Alphabet Inc.'s Google.
The U.S. says the new tax discriminates against U.S. companies
and has threatened to impose tariffs on French luxury goods. France
agreed to suspend collection of its digital tax until after Jan. 6,
2021, while international negotiations on the digital tax
French officials close to the negotiations said they didn't view
the deal for Tiffany as a potential bargaining chip, because the
acquisition was irrelevant to the talks.
Jean Jacques Guiony, LVMH's chief financial officer, last week
denied that the company solicited Mr. Le Drian's letter from the
government. "Are you seriously suggesting that we procured the
letter?" Mr. Guiony told reporters. "I don't even want to answer
Bloomberg previously reported LVMH had asked for help from the
French government in pulling out of the deal.
Mr. Le Maire didn't coordinate with Mr. Le Drian regarding
LVMH's request for help, the French officials said. The officials
said they were stunned by Mr. Le Drian's letter, because the
foreign minister didn't have a direct role in the tax talks. While
Mr. Le Drian oversees France's diplomatic relations with the U.S.,
he has taken a back seat to Mr. Le Maire in tax and trade
A spokeswoman for Mr. Le Drian didn't respond to a request for
comment. A spokeswoman for the finance ministry declined to
Tiffany filed a lawsuit against LVMH in the Delaware Chancery
Court, saying Mr. Le Drian's letter was a pretext for LVMH to back
out of the deal. Since then, LVMH has expanded its rationale for
pulling out, saying mismanagement of Tiffany during the coronavirus
pandemic has invalidated the merger agreement -- an allegation
On Wednesday, LVMH said in a court filing responding to
Tiffany's lawsuit that U.S. legal doctrine precludes courts from
questioning the validity of Mr. Le Drian's letter. LVMH said the
letter amounts to a local sovereign legal act on French territory,
which U.S. courts have traditionally exempted from further legal
In the letter, Mr. Le Drian stated that LVMH "should defer the
closing of the pending Tiffany transaction until January 6, 2021. I
am sure that you will understand the need to take part in our
country's efforts to defend its national interests." Foreign
ministry officials say such language isn't binding on LVMH under
LVMH said it was withdrawing from the agreement because Mr. Le
Drian's request would push completion of the merger past the Nov.
24 deadline stipulated in the agreement with Tiffany.
Tiffany has asked the Delaware court to rule on its lawsuit
before the deadline. LVMH on Wednesday said there was no need for
the court to rule that soon.
Write to Noemie Bisserbe at email@example.com and Matthew
Dalton at Matthew.Dalton@wsj.com
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September 18, 2020 02:47 ET (06:47 GMT)
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