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French Finance Minister Bruno Le Maire has backed the country’s foreign minister by requesting that LVMH, the French luxury goods conglomerate, postpone the acquisition of the American jewelry company Tiffany.
Le Maire said that Foreign Minister Jean-Yves Le Drian was protecting French interests with his intervention in the LVMH-Tiffany deal.
Le Drian wrote a letter to Bernard Arnault, LVMH’s chief executive, on August 31, requesting that he delay plans to buy Tiffany.
According to an excerpt from the letter reproduced by Marianne magazine, the letter calls for a postponement of the deal until early next year, to protect French national interests.
Last week, on September 8, LVMH’s legal team informed Tiffany that the French government had asked her to delay its acquisition due to trade tensions between France and the administration of US President Donald Trump.
In the letter, Le Drian referred to an earlier move by Trump:
“… The US government has decided to implement an additional customs duty on the importation of certain French goods, particularly goods from the luxury sector, in reaction to the adoption of a tax on digital services by France, and the US. It postponed its application until January 6, 2021. “
LVMH told Tiffany that it considers the French government document to be legally binding and that “therefore, it will not be able to complete the acquisition of Tiffany & Co.” before the $ 16.6 billion merger deal expires on Nov. 24.
French officials have questioned whether the letter is a binding request and said LVMH was free to do whatever it wanted.
LVMH, owner of Louis Vuitton, Dior and dozens of other luxury brands, also said Tiffany paid big dividends while posting losses.
He added that the American jeweler was underperforming and that its market value is now much lower than when the deal was signed in November 2019.
According to LVMH, Tiffany’s first half results and its 2020 outlook “are very disappointing and significantly lower than comparable LVMH Group brands during this period.”
Tiffany filed a lawsuit against LVMH on September 9 for breach of its obligations and is also suing LVMH to force it to complete the acquisition as planned at $ 135 per share or pay damages.
Tiffany CEO Roger Farah said that “LVMH will seek to use any available means in an attempt to avoid closing the transaction on the agreed terms.”
Farah added that “there is no basis in French law for the Foreign Minister to order a company to breach a valid and binding agreement.”
LVMH said it was surprised by the lawsuit filed by Tiffany.
“It has clearly been prepared by Tiffany long ago and communicated in a misleading way to shareholders and is defamatory,” says LVMH.
The legal action “demonstrates Tiffany’s dishonesty in its dealings with LVMH.”
