Louis Vuitton-Tiffany 'Mega Deal' Collapse Sparks Truth Dispute... Tiffany Pursues Legal Action (Comprehensive)

Tiffany Files Suit in Delaware Court for Specific Performance or Damages Claims

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kwon Jae-hee] The Tiffany & Co. acquisition battle by Louis Vuitton Mo?t Hennessy (LVMH), considered the largest 'mega deal' in the luxury industry, has ultimately escalated into a legal dispute. As LVMH attempted to initiate procedures to cancel the acquisition based on a request from the French government, Tiffany filed a damages lawsuit in a Delaware court, arguing that "the French government's request has no legal basis."

According to the Wall Street Journal (WSJ) on the 9th (local time), LVMH announced that it would halt the $16.6 billion (approximately 19 trillion KRW) Tiffany acquisition process in accordance with the wishes of the French government. In a statement, LVMH said, "We have received an order from the French government to postpone the Tiffany acquisition until after January 6 of next year," adding, "At this time, we cannot complete the acquisition." This represents a delay of more than a month from the original negotiation deadline of November 24.

French Foreign Minister Jean-Yves Le Drian explained in a letter to LVMH, "The extension of the acquisition deadline is necessary to assess the impact of the Trump administration's threat of high tariffs on French products," and added, "We are confident that you will join efforts to defend France's national interests." WSJ analyzed that the letter sent by the French government to LVMH directly referenced President Trump's moves to impose tariffs on certain French industries, including luxury goods, in retaliation against France's introduction of a digital tax.

However, while the French government confirmed sending such a letter, it clarified that it was not mandatory. Bloomberg cited sources reporting that Bernard Arnault, chairman of LVMH, requested the French government to help him exit the acquisition battle. Although LVMH had agreed to acquire Tiffany before the COVID-19 pandemic, the ongoing downturn in the luxury industry afterward led them to seek assistance from the French government to cancel the acquisition. LVMH denied these reports.

Tiffany also claimed that LVMH was using the French government as an exit strategy to withdraw from the acquisition battle. Tiffany filed a lawsuit in the Delaware Court of Chancery on the same day, demanding that LVMH either fulfill the acquisition contract or pay damages, stating that "the French Foreign Ministry's request has no legal basis."

According to the complaint, Tiffany alleged that LVMH violated the acquisition agreement by requesting Tiffany to suspend dividend payments to shareholders until the merger was completed.

Additionally, Tiffany pointed out that LVMH deliberately delayed the process by dragging its feet during the filing of corporate combinations with the EU, Taiwan, Japan, and other jurisdictions.

Roger Farah, Tiffany's chairman, criticized, "We believe LVMH will use every possible means to avoid completing the deal under the agreed terms."

The truth battle between the two companies has complicated the tariff war between France and the United States. As a countermeasure against France's digital tax, the U.S. plans to impose a 25% retaliatory tariff on $1.3 billion worth of French products, including cosmetics and handbags, through the U.S. Trade Representative (USTR) on January 6 next year. The French government has requested LVMH to postpone the acquisition until that date.

Meanwhile, Tiffany recorded a net profit of $262 million (approximately 1.541 trillion KRW) last year but posted a net loss of $33 million (approximately 39.1 billion KRW) this year. Tiffany's stock closed at $113.96 (approximately 135,000 KRW), down 6.44% from the previous day.

This content was produced with the assistance of AI translation services.