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LVMH stated that despite the talks and negotiations the conditions necessary to close the acquisition of Tiffany had been not created.
LVMH Moët Hennessy Louis Vuitton SA (OTCMKTS: LVMUY), the French luxury company that would have sealed an acquisition deal for Tiffany has filed a suit to counter Tiffany’s earlier court action. In a recent statement, the company said that it is in its own right to reject the acquisition bid considering new realities.
The counter-suit file on Monday at Delaware, LVMH stated that there is material evidence to show that the Tiffany management was not prudent in the face of the adverse effects of the coronavirus pandemic. Adding that the company paid out a huge dividend to its investors at a time that the luxury goods industry was suffering setback because of low sales resulting from COVID-19 lockdowns.
“For instance, Tiffany paid the highest possible dividends while the company was burning cash and reporting losses. No other luxury company in the world did so during this crisis. There are many examples of mismanagement detailed in the filing, including slashing capital and marketing investments and taking on additional debt,” LVMH said in a statement a day after filing its counter-suit.
Why LVMH Doesn’t Want to Buy Tiffany Now
The company stated that it is confident that despite the talks and negotiations the conditions necessary to close the acquisition of Tiffany had not been made, although Tiffany owners think otherwise.
The French luxury goods company announced that due to impending restrictive trade actions by the U.S. government, that it would no longer continue with a planned acquisition of Tiffany, prompting a lawsuit from the latter. LVMH maintained that in view of new realities, especially after the COVID-19 restrictions, that the company would not be able to go ahead with the proposition.
Tiffany had earlier requested that the deal completion be extended until December before the Vuitton Louis owner decided to cancel, citing proposed higher tariffs on French goods.
The scrapping of the planned acquisition in early September prompted the legal action from the luxury chain, Tiffany which would have been acquired by LVMH for a massive $16.2 billion. As a result, the deal was poised to be the largest takeover in the luxury sphere.
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