LVMH’s Guiony insists that ministerial decision makes pulling out of Tiffany deal a fait accompli
Sep 9, 2020
The world’s largest luxury company LVMH insisted Tuesday that its decision to pull out of the agreement to buy Tiffany & Co, its biggest ever acquisition, was simply due to a letter from the French Foreign Ministry instructing it to delay its $16.2 billion takeover of the American jewellery company.
“We cannot continue with this deal anymore,” insisted Jean-Jacques Guiony, LVMH Group CFO, in a conference call to financial press, completely blaming the French government for the change of plans.
“We cannot impose a deal structure that is totally unclear. So, we will not move ahead with this due to this technical reason. We have to comply with the terms of the letter,” Guiony insisted.
In a statement from LVMH before the conference call, the luxury conglomerate claimed its board had “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 differ the acquisition of Tiffany until after January 6th, 2021.” Furthermore, the board noted Tiffany & Co requested to "extend the “Outside Date” in the Merger Agreement from November 24th to December 31st, 2020.”
Meaning the government mandated delay fell after the closing deadline of November 24th, 2020, thus preventing LVMH from being able to complete the acquisition of Tiffany.
Asked directly whether LVMH planned to seek compensation from the French government, Guiony demurred on the grounds that one cannot contest a ministerial directive.
“They (the government) just tell you what they expect you to do. They just made it clear in the context of trade discussions we have to postpone it until January 2021. That’s it,” said the CFO, speaking in English, adding that LVMH had sent a letter on to Tiffany along with a French translation of the minister’s instruction.
“It’s not a story we invented yesterday. It’s a pretty brief letter and they (the ministry) didn’t explain why they didn’t want this to happen. It’s a valid letter and the government has the right to do this.”
In response, Tiffany have already announced plans to contest this decision in court, but Guiony insisted that LVMH was confident of its legal position.
“I hardly see how a judge in Delaware, on seeing a valid French letter from a minister instructing a French company, could ignore that. That’s what this is about. This is where we are with the lawsuit, let’s see what happens.”
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