LVMH announced that it is backing out of its agreement to buy Tiffany & Co., and the retailer is not happy about it.
In a statement issued Wednesday September 9 morning, LVMH cited closing date issues—Tiffany reportedly asking for a second extension to Dec. 31, 2020 and the French government requesting LVMH wait until January 2021 because of proposed U.S. tariffs on French luxury goods—as the reason for its decision to call off the deal.
LVMH said: “As a result of these elements, and knowledge of the first legal analysis led by the advisors and the LVMH teams, the board decided to comply with the merger agreement signed in November 2019 which provides, in any event, for a closing deadline no later than Nov. 24, 2020 and officially records that, as it stands, LVMH will therefore not be able to complete the acquisition of Tiffany & Co.”
Tiffany responded with its own statement Wednesday morning, announcing it was suing LVMH in an attempt to force it move forward with the $16.2 billion deal.
It claims LVMH has breached the merger agreement, dragging its feet on its obligations and searching for loopholes to get out of the acquisition as outlined.
LVMH, the retailer claims, did not uphold its obligation to “do everything necessary” to secure all required regulatory clearances as promptly as possible.
The merger agreement originally set the deal’s closing date for Aug. 24 but Tiffany asked to extend to Nov. 24—an extension allowed under the agreement—because they still needed a number of antitrust clearances, which Tiffany says LVMH has not been proactive in getting.