Tiffany and LVMH, barely engaged, already divorced.

Bernard Arnault's group no longer considers itself "able" to buy back "as it is" the American jeweler, who responded by attacking the French group in court in the United States.

Their engagement made the headlines last November, when the world number one in luxury announced it wanted to bite the prestigious New York brand for the record amount of $ 16.2 billion.

Le Drian warned LVMH of risks associated with Tiffany takeover

But the health crisis has notably passed through this.

After announcing at the end of August that they were pushing back by three months, to the end of November 2020, the deadline for completing their merger, LVMH announced on Wednesday September 9 that it had decided to meet its board of directors, "after a succession of 'events likely to weaken the acquisition of the Tiffany company.

LVMH in particular reported "a letter from the Minister for Europe and Foreign Affairs (Jean-Yves Le Drian, Editor's note) which, in reaction to the threat of taxes on French products formulated by the United States, asks the LVMH group to defer the acquisition of Tiffany beyond January 6, 2021 ".

This letter was sent in the context of digital tax negotiations with the United States and aimed to emphasize to LVMH the risk, until January 2021, of American sanctions "with a very heavy impact in the targeted sectors" such as luxury goods, a source told Reuters

"We have no other choice but to apply the terms of this letter" which "are binding on LVMH", underlined during a press conference the chief financial officer of LVMH, Jean-Jacques Guiony.

He added that LVMH was not happy with the way Tiffany had been managed in recent months, deeming its performance "lackluster".

The group had previously said they had been informed of Tiffany's request to postpone finalizing the buyout from Nov. 24 to Dec. 31.

"Taking into account these elements, and taking cognizance of the first legal analyzes carried out by the councils and the teams of LVMH, the board of directors has (...) noted, that in the state, the group LVMH would not therefore be unable to complete the acquisition of the Tiffany company, ”he said in a statement.

Justice Seized in the United States

Tiffany, who took legal action in Delaware, claims for her part to have complied with all the terms of the agreement announced in November 2019 but, on the other hand, criticizes Bernard Arnault's group for not having honored its own commitments, in particular to solicit in time required the opinions of the competition authorities.

The jeweler also accuses LVMH of having informed him late, only Tuesday, of the letter from the Quai d'Orsay dated August 31, of which he says he has not obtained a copy.

"We believe that LVMH will seek to use all means necessary to try to avoid closing the transaction on the terms agreed," said Roger Farah, president of Tiffany, quoted in a statement.

On the Paris Bourse, the LVMH share, trending upward at the start of the session, went into the red after the group's statements and closed slightly down 0.09% to 404.05 euros.

As for Tiffany's stock, it fell 11% on Wall Street following the publication of the LVMH press release and lost another 6.95% around 7.15 p.m. GMT.

With AFP and Reuters

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