The falling out between European luxury goods conglomerate LVMH
The bitter dispute between LVMH and Tiffany & Co has played out in headlines over the last few weeks, beginning with LVMH backing out of its deal to purchase the American jeweler. The theatrical dispute has played out almost like a divorce proceeding, with LVMH even stating in its filings that Tiffany once "stood for love" but is now a mismanaged company with "dismal" products, and that it was a far cry from the company LVMH offered to buy last November.
LVMH's legal filings' allegations tie into earlier arguments the company had provided to the media when the deal initially fell apart. Tiffany saw a 29% loss in worldwide sales due to the pandemic and missed Wall Street expectations by tens of millions of dollars. At the time, LVMH CEO Jacques Guiony called Tiffany's performance "lackluster." Among the new arguments against the deal in LVMH's legal filings are accusations that Tiffany was paying large dividends and taking on extra debt at a time where it was posting considerable losses.
"Tiffany's mismanagement of its business constitutes a blatant breach of its obligation to operate in the ordinary course... There are many examples of mismanagement detailed in the filing, including slashing capital and marketing investments and taking on additional debt," the company says in its filings.
Tiffany & Co has combatted LVMH's arguments and has maintained that the French conglomerate is merely trying to avoid carrying out the deal.
"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," said Chair Roger Farah.
