LVMH and Tiffany Fashion Bold Litigation Messages
The dispute between LVMH and Tiffany & Co. has given rise to some of the most aggressive litigation communications we’ve seen in some time. Both outfits clearly feel the need to let their shareholders and others know where they stand.
LVMH, the world’s largest luxury-goods company, on Nov. 25 announced it would buy Tiffany, the fancy jewelry hawker, for $135 a share in cash, or $16.2 billion. Then the COVID-19 pandemic hit and the market tanked.
On Sept. 9, Paris-based LVMH (full name LVMH Moët Hennessy Louis Vuitton SE) said it was breaking up with New York-based Tiffany. It cited two reasons: (1) The French government had asked it to put off the purchase until January because of a U.S. threat to raise duties on luxury imports, and (2) Tiffany asked to postpone the official wedding date until Dec. 31. The original agreement calls for the nuptials to be completed by Nov. 24. So, deal over.
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 N. Farah
Tiffany, vendor of ritzy wedding rings, was left at the altar. That same day, it announced it had sued its betrothed to force the marriage. In the press release, weighing in at more than 1,100 words, Tiffany made several contentions:
- It denied that “the transaction is in some way inconsistent with [LVMH’s] patriotic duties as a French corporation.” It was unaware of any other French company receiving such a request from the government, which showed its fleeing suitor was acting in bad faith.
- It accused LVMH of not pursuing the needed antitrust clearances. Tiffany asked for an extension to the Nov. 24 deadline because of the laxity on the antitrust front.
- LVMH provided no basis for its assertions that the jeweler breached its obligations and that there had been a “material adverse effect,” typically invoked when a company wants to wriggle out of a deal (it’s unclear where the French firm asserted this). For one thing, Tiffany’s financial results during the pandemic compared favorably with those of other luxury companies, including LVMH.
“We believe that LVMH will seek to use any available means in an attempt to avoid closing the transaction on the agreed terms” (read: the price), the statement quoted Tiffany Chairman Roger N. Farah.
That wasn’t the end of it. The next day, Sept. 10, LVMH issued a press release of its own stating it was “surprised” by the lawsuit. It claimed Tiffany had forged its complaint long before the French company called off the marriage, which it said showed the “dishonesty of Tiffany in its relations with LVMH.”
Hot stuff. LVMH ventured several other points:
- Tiffany was misleading its shareholders and the lawsuit is “defamatory.”
- The antitrust allegations were false and LVMH would file with the European Commission “in the following days” (strange, given that it wants out).
- Tiffany’s financial results for this year’s first half were “very disappointing, and significantly inferior to those of comparable brands of the LVMH Group.”
- Tiffany did indeed undergo a material adverse effect.
Many media outlets reported this last point as LVMH accusing Tiffany of mishandling the COVID-19 situation. The body of the release doesn’t precisely blame the pandemic or say LVMH will countersue, but the headline is “LVMH Intends to File a Lawsuit Against Tiffany as a Result of Crisis Mismanagement.” The Wall Street Journal’s headline was “LVMH Says Tiffany’s Handling of Pandemic Invalidates Merger.”
Just yesterday, Tiffany issued another press release complaining that LVMH, also yesterday, asked the court to put off any trial for six or seven months. LVMH hit back today. “There are no objective reasons why the upcoming trial should not take place within a normal timeframe,” it said, adding that Tiffany is “communicating feverishly and hastily.”
Can this (proposed) marriage be saved? If so, it doesn’t appear it would result in wedded bliss.
Photo Credit: LVMH via Facebook
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