LVMH has filed a countersuit against Tiffany, disputing the jeweler’s claims LVMH was to blame for the breakdown of their $16-billion merger talks.
Matt Clinch reported the news for CNBC:
LVMH said Tuesday it had filed a countersuit against Tiffany in a bid to walk away from the $16.2 billion takeover that would have been the biggest ever in the luxury industry.
The suit, filed Monday in Delaware, says that LVMH “continues to have full confidence in its position that the conditions necessary to close the acquisition of Tiffany have not been met.” It adds that the “spurious arguments put forward by Tiffany are completely unfounded.”
Jessica DiNapoli from Reuters wrote:
In its counterclaims filed in Delaware Chancery Court on Monday, LVMH said the agreement with Tiffany had no carve-out for pandemics under the definition of a so-called material adverse effect. As a result, Tiffany assumed the risk of a virus outbreak, LVMH added.
The French company also said Tiffany breached its agreement to operate as usual by paying out the highest possible dividend.
The Wall Street Journal’s Matthew Dalton noted:
The complaint says Tiffany’s dependence on the U.S. market and foot traffic in malls means the jeweler’s prospects are particularly grim compared with the broader luxury industry, which has been thrown into turmoil by the pandemic.
To escape from a merger contract, acquiring companies face the burden of showing that a target company’s performance has been unusually bad relative to others in its industry, legal experts say.