By Ben Winck via Business Insider
Tiffany shares tanked as much as 11% on Wednesday after Louis Vuitton-owner LVMH scrapped plans to acquire the jewelry company for $16.2 billion.
In a Wednesday press release, LVMH said Tiffany sought to extend the deal’s closing date to December 31 from the previously established deadline of November 24. LVMH also said the French European and Foreign Affairs Minister directed Tiffany to defer the acquisition until after January 6 in reaction to the threat of tariffs on US goods. The two delays leave LVMH unable to complete the deal, the fashion conglomerate said.
Tiffany fired back soon after, filing a lawsuit against LVMH to keep the deal intact. LVMH aimed to leverage US social justice protests and the coronavirus pandemic to “avoid paying the agreed price for Tiffany shares,” the jewelry giant said in a press release.
Tiffany also said the government’s request for a new deal deadline has no basis under French law, and that LVMH’s decision to call off the deal before consulting Tiffany breached their contract.
“We believe that LVMH will seek to use any available means in an attempt to avoid closing the transaction on the agreed terms,” Roger Farah, chairman of Tiffany’s board of directors, said in a statement.
Both luxury goods companies have been slammed by the coronavirus pandemic as consumers cut down spending on discretionary goods. Tiffany recorded its first quarterly loss in six years over the first quarter before sales swung higher in the following three-month period. The sales decline left investors wondering whether LVMH overpaid for the jeweler. Read more from Business Insider.
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