Tuesday, 20 Oct 2020

Tiffany vs. LVMH — War Waged With Zingers

The stakes are high in Tiffany & Co. vs. LVMH Moët Hennessy Louis Vuitton. 

And when the two sides face off for the first time in the Delaware Court of Chancery today, they will be extending a legal battle that could determine: 

• If the Bernard Arnault-led LVMH has to transfer $16.2 billion to Tiffany shareholders in what would be the titan’s largest luxury deal ever and the ultimate shotgun wedding.  

• Who leads the 183-year-old jeweler and it’s 14,100 employees through the rest of the coronavirus crisis.

• The contours of the competitive landscape in high-end jewelry. 

And the rhetorical stakes are also high. 

Already, both sides are in flame-throwing mode, a marked change from the much more positive tone between the two companies at the beginning of the year when the deal was struck. The shift proves that nothing can make a superlative sour quite like a multibillion-dollar merger gone wrong.

The battle lines are drawn. LVMH argued first that it was asked by the French government to postpone the deal (with numerous press reports claiming it was LVMH that asked the French government for the request) and then said Tiffany has been mismanaged and continued to pay dividends despite subpar performance, triggering a key out in the merger contract. Tiffany has answered that its management of the COVID-19 crisis has been just fine, thank you; that it was required to continue to pay dividends, and that LVMH has slow-walked regulatory approval for the deal and needs to live up to its bargain. 

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LVMH filed for regulatory approval from the EU on Friday, to hold up its end of the process even though it wants to drop the deal.

That’s what they’re saying now, but how the two sides have spoken is telling. Here’s a look back at how the corporate love affair — Tiffany was said to long be of keen interest to Arnault — fell apart and just how mad the two sides will be when they finally get before a judge.

Nov. 25, 2019

Bernard Arnault: “We have immense respect and admiration for Tiffany and intend to develop this jewel with the same dedication and commitment that we have applied to each and every one of our maisons.”

Roger Farah, Tiffany chairman: “This transaction with LVMH provides an exciting path forward with a group that appreciates and will invest in Tiffany’s unique assets and strong human capital, while delivering a compelling price with value certainty to our shareholders.”

Alessandro Bogliolo, Tiffany chief executive officer: “As part of the LVMH group, Tiffany will reach new heights.”

Feb. 5

Arnault: “A globally recognized symbol of love, Tiffany will be an outstanding addition to our unique portfolio of luxury brands. We look forward to welcoming Tiffany into the LVMH family.”

April 16

Jean-Jacques Guiony, LVMH chief financial officer: “We signed a merger agreement. This document is public, so you know what is inside. We will stick to the contract, full stop. I mean that’s the only thing I have to say.” (Answering an analyst question on whether or not the company could “walk back” the Tiffany deal.)

Sept. 9

LVMH: “As it stands, the Group LVMH will therefore not be able to complete the acquisition of Tiffany & Co.”

Tiffany: “At the direction of billionaire Bernard Arnault, one of the richest persons in the world, LVMH is trying to take advantage of the pandemic and recent social-justice protests in the U.S. to strong-arm Tiffany into agreeing to a reduced merger price.” (In its lawsuit against LVMH.)

Farah: “We believe that LVMH will seek to use any available means in an attempt to avoid closing the transaction….As we are not aware of any other French company receiving such a request, it is all the more clear that LVMH has unclean hands.”

Sept. 10

Guiony: “You must be joking. Are you seriously suggesting that we procured the letter? I don’t even want to answer that question. [The letter from the French government] was fully unsolicited.” (In response to a reporter’s question.)

Guiony: “To be frank, we were not entirely happy with the way [Tiffany] has been managed and performed over the last few months.”

LVMH: “LVMH will defend itself vigorously. The long preparation of this assignment [lawsuit] demonstrates the dishonesty of Tiffany in its relations with LVMH.”

Sept. 16

Farah: “LVMH’s opposition to our motion to expedite is the latest attempt to run out the clock to avoid fulfilling its obligations under the merger agreement. If LVMH were confident in its legal position, it would have no reason to oppose an expedited trial schedule.”

Farah: “LVMH’s shifting explanations indicate bad faith in its dealings with Tiffany and are nothing more than distractions meant to hide its efforts to run out the clock and avoid fulfilling its obligations.”

Sept. 17

LVMH: “Tiffany clearly fears a serene and fair rendering of justice….It is up to the Delaware court to determine who is in his right, and not the chairman of Tiffany through the press.”

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