Luxury giant LVMH pulls out of Tiffany deal
Luxury giant LVMH said Wednesday it was calling off its planned US$16.2-billion acquisition of US jeweller Tiffany, as the glittering marriage threatened to descend into a bitter legal battle.
LVMH said its board had decided not to tie the knot after all, following "a succession of events which undermine the acquisition of Tiffany & Co," notably US threats to slap tariffs on French products.
Spurned Tiffany responded by saying it would take legal action to push the deal through.
The French luxury goods giant said it had learned of a letter from the French foreign affairs minister Jean-Yves Le Drian directing it to defer the acquisition in reaction to Washington's threat to levy taxes on French products.
It also said that Tiffany had requested an extension to the closing date of the merger.
Therefore, "as it stands, LVMH will not be able to complete the acquisition of Tiffany & Co."
Tiffany shot back, saying it would sue LVMH for breaching "its obligations relating to obtaining antitrust clearance" for the deal.
"We regret having to take this action, but LVMH has left us no choice but to commence litigation to protect our company and our shareholders," said board chairman Roger N. Farah, insisting Tiffany was committed to completing the deal.
The takeover would have been LVMH's largest-ever acquisition, enabling itto bolster its presence in the United States, currently its second-largest market.
LVMH -- which is led by billionaire Bernard Arnault and owns brands such as Louis Vuitton, Dior and Moet & Chandon -- spent more than a month wooing Tiffany, one of the world's most famous jewelry houses, known for its wedding rings and diamonds.
Arnault had described Tiffany as "an emblematic brand, an American icon that will become a little bit French."
Tiffany, founded in 1837 and headquartered on glamorous Fifth Avenue in New York, has long symbolised tony American sophistication, most memorably in the 1961 film "Breakfast at Tiffany's" starring Audrey Hepburn, based on the Truman Capote novella.
Under the proposed deal, LVMH was to have acquired Tiffany for US$135 a share in cash.
Tiffany, lagging behind its rivals in terms of sales growth in recent years, had been expected to benefit from LVMH's extensive global network and promotional power.
LVMH shares were showing a loss of 0.9 percent at 400 euros in the wake of the announcement, while trading had not yet begun in Tiffany's shares on the New York Stock Exchange.