Tiffany & Co. has responded to what it calls “baseless and misleading” counterclaims filed by LVMH on Monday.
The pair are locked in a legal battle after LMVH announced its intention to back out of a £14 billion takeover deal. It argues that Tiffany is now a different business to the one it agreed to buy following the pandemic.
But Tiffany & Co chairman Roger Farah hit back: “LVMH’s specious arguments are yet another blatant attempt to evade its contractual obligation to pay the agreed-upon price for Tiffany. Tiffany has acted in full compliance with the Merger Agreement, and we are confident the Court will agree at trial and require specific performance by LVMH.”
In a statement, Tiffany reiterated several key points in response to LVMH’s allegations.
In early September, LVMH stated publicly that it would be unable to complete its acquisition of Tiffany because it had received a directive from a French government official that prohibits the acquisition prior to the outside date under the Merger Agreement. LVMH subsequently asserted publicly that the letter was not solicited by LVMH.
However, Tiffany said that on the floor of the French parliament last week, the Minister who signed the letter admitted that he only sent the letter in response to an inquiry from LVMH.
“Despite Tiffany’s many requests, LVMH still has not provided Tiffany or the Court with a copy of the letter. LVMH’s seeking this letter was a clear violation of its obligations under the Merger Agreement, and Tiffany anticipates that more of LVMH’s duplicity will come to light during the trial,” the company stated.
Tiffany also branded LVMH’s claim of a Material Adverse Effect (MAE) as “baseless” and without “factual, contractual or legal support”.
It said: “As previously stated, Tiffany experienced a single quarter of losses before returning to profitability and projects fourth-quarter earnings in 2020 greater than those in the same period in 2019 – the exact opposite of LVMH’s unsupported claims that the ‘Pandemic has devastated Tiffany’s business’ and that ‘Tiffany’s recent woes are just the beginning of its troubles.’
“Nothing alleged by LVMH has come close to meeting the MAE definition in the Merger Agreement, which excludes all ‘changes or conditions generally affecting the industries in which [Tiffany] operate[s]’ and “general economic or political conditions.”
Tiffany also defended its decision to pay dividends on the basis that they were expressly authorised and argued that criticism over store closures in the US did not take into account that it had a duty to protect the health and welfare of staff.