LVMH Says Deal With Tiffany's Scuttled Under Threat of Tariffs
LVMH won't acquire Tiffany & Co. as previously planned, due in part to tariffs on goods from France scheduled to take effect in January (see 2007130043), LVMH said in a Sept. 9 news release. During an LVMH board of directors meeting, “the Board learned of a letter from the French European and Foreign Affairs Minister which, in reaction to the threat of taxes on French products by the US, directed the Group to defer the acquisition of Tiffany until after January 6th, 2021,” LVMH said. Based on that and other analysis, LVMH said it can't complete the acquisition “as it stands.”
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Tiffany filed a lawsuit against LVMH, it said in a news release the same day. LVMH hasn't given the company a copy of the Aug. 31 letter, “but an English translation provided by LVMH states that 'the American government has decided to implement an additional customs duty on the import of certain French goods, in particular goods in the luxury sector' and that LVMH 'should defer the closing of the pending Tiffany transaction until January 6, 2021' in order to support the French Foreign Affairs Minister’s stated intent to 'take measures in order to dissuade the American authorities from putting these tariff sanctions into effect,'” the jewelry company said.
Tiffany Chairman Roger Farah said the company believes “that LVMH will seek to use any available means in an attempt to avoid closing the transaction on the agreed terms.” Farah also expressed skepticism over the purported reasons for stopping the purchase. “[T]his supposed official French effort to retaliate against the U.S. for proposed new tariffs has never been announced or discussed publicly; how could it possibly then be an effort to pressure the U.S. into revoking the tariffs?” Farah said. “Furthermore, as we are not aware of any other French company receiving such a request, it is all the more clear that LVMH has unclean hands.”