France: the State to the rescue of LVMH to postpone the takeover of Tiffany
LVMH was to buy Tiffany for some $ 16 billion, before announcing on September 9 that it could no longer complete the transaction as it was.
REUTERS / Christian Hartmann
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4 min
New twist in the divorce between LVMH, the French luxury giant, and the American jeweler Tiffany.
The French Minister of Foreign Affairs has sent a letter asking LVMH to postpone the purchase of Tiffany at the request of the Elysee, according to a source close to the head of state.
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LVMH was to buy Tiffany
for some 16 billion dollars, before announcing, on September 9, that it could no longer complete the operation "
as is
" on the date scheduled, November 26.
Tiffany immediately went to court to force the French group to respect the terms of the agreement.
A 4-day blitz is scheduled to begin Jan. 5 in court in Delaware, United States.
In his letter to LVMH, Jean-Yves Le Drian justified his request to postpone the purchase of Tiffany beyond January 6 in “
reaction to the American threat of taxes on French products
”.
This is a first reason.
But there is also the Covid-19 which hit the world after the promise of marriage between LVMH and Tiffany.
The luxury sector is losing its luster, the title of Tiffany goes down sharply.
As early as March, LVMH reportedly tried to lower the purchase price of the jeweler's share, negotiated to 135 euros, a pre-Covid-19 price considered much too expensive today.
Bruno Le Maire requested
To help him, according to a source familiar with the matter, Bernard Arnaud would have first requested the intervention of Bruno Le Maire, Minister of the Economy, without success.
He would then have asked the head of the Quai d'Orsay this summer, which the boss of LVMH denies.
According to someone close to the Elysee, Jean-Yves Le Drian would have written to LVMH at the request of the Head of State to send "
a signal to the Americans
" in the current trade war and to allow Bernard Arnault to push back the acquiring Tiffany on better days or renegotiating its purchase price downward.
For LVMH, the conditions for the completion of the acquisition are no longer met
While the date for the start of the trial has been set for January 5, 2021, the chairman of the board of directors of Tiffany, Roger Farah, spoke about this court decision in a press release: "
We will demonstrate to the Court that LVMH is in flagrant violation of its obligations under a valid and binding agreement and that their argument of material adverse effect is completely unfounded
.
"
The French group said for its part to have "
taken note
" of the court decision.
"
LVMH is fully confident in its ability to reject Tiffany's accusations and to convince the Court that the conditions for this acquisition are no longer met,
" the group said in a statement.
"
In this regard, LVMH will demonstrate over the next few months to the American courts that Tiffany's mismanagement during the Covid-19 crisis constitutes a significant adverse effect
," added LVMH.
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To read: LVMH plays the card of economic patriotism to justify the abandonment of Tiffany
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