PARIS: Luxury giant LVMH called off its planned $16.2-billion acquisition of US jeweller Tiffany on Wednesday and the sparkling tie-up threatened to become a bitter legal battle. LVMH said its board had decided not to tie the knot following "a succession of events which undermine the acquisition of Tiffany & Co," notably US threats to slap tariffs on French products.
Spurned Tiffany responded by saying it would take legal action to push the deal through.
The French luxury goods giant said it had learnt of a letter from French Foreign Minister Jean-Yves Le Drian directing it to defer the deal in reaction to Washington's threat to levy taxes on French products.
It also noted that Tiffany had requested an extension to the closing date of the merger.
Therefore, "as it stands, LVMH will not be able to complete the acquisition of Tiffany & Co."
Tiffany shot back, saying it would sue LVMH for breaching "obligations relating to obtaining antitrust clearance" for the deal.
It added that terms of the deal allowed either side "to unilaterally extend the outside date to November 24, 2020 if antitrust clearances are the only remaining condition to closing at August 24, 2020." "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," said board chairman Roger N. Farah.
He insisted that Tiffany was committed to completing the deal.
The takeover would have been LVMH's largest-ever acquisition, enabling it to bolster its presence in the United States, currently its second-largest market.
LVMH - which is led by billionaire Bernard Arnault and owns brands such as Louis Vuitton, Dior and Moet & Chandon - spent more than a month wooing Tiffany, one of the world's most famous jewelry houses, known for its wedding rings and diamonds.
"Among all luxury segments, jewellery was one of the fastest growing globally (at seven percent annually in 2018), hence generating much interest," noted Fflur Roberts at Euromonitor International.
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