LVMH has called off its planned $16.2 billion acquisition of Tiffany & Co.
Tiffany (NYSE: TIF) has, in turn, filed a lawsuit to compel the luxury conglomerate to follow through with the deal.
LVMH said it received a letter from France’s foreign affairs minister asking that the transaction closing be delayed until after Jan. 6. The company said the request came “in reaction to the threat of taxes on French products by the US.”
“Furthermore, the Board noted Tiffany & Co.’s requested to extend the ‘Outside Date’ in the Merger Agreement from November 24th to December 31st, 2020,” the company stated.
Because the closing deadline won’t be met, “The deal cannot happen,” Reuters quoted LVMH finance chief Jean Jacques GuionyGuiony saying.
“We are prohibited from closing the deal.”
But Reuters noted that the deal has become less attractive for LVMH in light of decreased luxury sales amid the COVID-19 pandemic.
Tiffany said in its lawsuit, filed in the Court of Chancery of Delaware, that LVMH’s real objective is “to attempt to renegotiate the merger price to which the parties agreed last November and, barring renegotiation, run out the clock.”
The merger remains subject to regulatory clearance by the European Commission, the Japan Fair Trade Commission, the Mexican competition authority and the Taiwan Fair Trade Commission.