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 articles that also appeared in the U.S. print edition of The Wall Street Journal (September 18, 2020).

PARIS -- LVMH Mo√ęt 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 its decision.

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 officials said.

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 continue.

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 that question."

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 discussions.

A spokeswoman for Mr. Le Drian didn't respond to a request for comment. A spokeswoman for the finance ministry declined to comment.

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 Tiffany denies.

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 scrutiny.

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 French law.

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 and Matthew Dalton at


(END) Dow Jones Newswires

September 18, 2020 02:47 ET (06:47 GMT)

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