The CEO of the LVMH group, Bernard Arnault, during a press conference in Paris, January 29, 2019. -

ERIC PIERMONT / AFP

In the aftermath of the broken engagement between LVMH and Tiffany, the world number one in luxury in turn went on the legal attack this Thursday, announcing its intention to take legal action across the Atlantic against the American jeweler.

"Bad faith", "bad results", "defamation" ... LVMH did not mince words, moving a little further away from the prospect of a marriage that was shaping up to be the most prosperous of the century in luxury, with 16.2 billion dollars in the American bride's basket.

Legal action "long prepared" by Tiffany

On Wednesday, restraint was still in order when Bernard Arnault's group announced that it was "no longer able" to buy Tiffany "as is", arguing "a succession of events likely to weaken the operation acquisition ”.

The main argument put forward by LVMH, namely a letter from the French Ministry of Foreign Affairs asking the group to postpone this strategic acquisition to January 6, 2021, was also external to the two companies.

But Tiffany immediately replied in the legal field, not hesitating to accuse LVMH of having dragged out regulatory proceedings.

Thursday, LVMH therefore changed its approach and expressed its "astonishment" regarding the legal action of the jeweler, which he considers in a press release "totally unfounded.

It has obviously been prepared for a long time by Tiffany and has been communicated in a manner that is misleading to shareholders and defamatory ”.

"The long preparation for this summons shows Tiffany's bad faith in its relations with LVMH", continues the group.

A "lastingly affected" relationship

The main part of the procedure initiated by the jeweler “is based on the criticisms made by Tiffany against LVMH for not having acted diligently to obtain administrative authorizations relating to antitrust rules throughout the world.

This accusation has no substance and LVMH will demonstrate it before the Delaware civil court, ”said the luxury giant in its press release.

He also affirms that “the notification in Brussels will take place, as planned, in the coming days and this date is simply the result of the schedule fixed with the European Commission itself, which Tiffany knows perfectly well.

And it is legitimate to think that his authorization will be obtained in October ”.

However, this gesture should not be seen as the prospect of reconciliation between the two groups: it may simply be a way for LVMH to demonstrate its good faith before the American judge.

According to people accustomed to this type of case, "the procedure is in fact usually completed for this type of operation, which does not prejudge its realization".

Definitely finished?

The luxury giant also wore the iron on the ground of Tiffany's results and prospects for the year 2020, qualified as "bad" and "significantly lower than those of comparable brands of the LVMH group during the period".

Bernard Arnault's group indicates that it will “therefore be called upon to question the management of the crisis by the management of Tiffany and its board of directors”.

“LVMH considers, among other things, that this period is affected by a situation of force majeure, that Tiffany did not follow a normal management framework, in particular by distributing substantial dividends when the company was in loss and that the operations and the organization of this company have not been preserved ”.

In conclusion, LVMH “confirms that the conditions necessary for the completion of the Tiffany acquisition are not met”.

However, is marriage definitely buried?

Market players are still struggling to believe it.

For analysts at GAM Investments, either LVMH is "looking for a bigger deal" or it's "the only way it has found to bring Tiffany back to the negotiating table", at a lower price. phase with post-crisis reality.

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