LVMH yesterday broke off its $16.2 billion engagement to Tiffany & Co., and then the two sides sprinted to file competing lawsuits in Delaware.
What we learned: The French government may have played a key role in the split, asking LVMH to delay the deal close for two months past the agreed-upon deadline.
Details: The request came via an August 31 letter from France's foreign affairs minister, who is the equivalent to the U.S. secretary of state. According to an English translation disclosed by Tiffany, it reads in part...
Basically, LVMH told Tiffany: "I really like you, but my parents hate your parents, so I just don't think it'll work out right now."
Tiffany didn't take the rejection in stride. It seems to believe LVMH is using the French government request as cover for its own cold feet, referencing how LVMH previously tried to negotiate deal terms under the guise of "U.S. social justice protests and the COVID-19 pandemic."
- It wants Delaware Chancery Court to enforce the deal.
- It also got some backup via a new Bloomberg report that LVMH chairman Bernard Arnault "asked for help from the French government in an effort to pull out of [the deal]."
LVMH this morning said not only that it will "defend itself vigorously," but also that it will file a lawsuit of its own — claiming Tiffany violated the deal terms through "crisis mismanagement."
- Specifically, LVMH says it will cite dividend distributions during the pandemic.
The bottom line: Breakups can be messy, particularly when there's a third party involved.
