LVMH countersued Tiffany, arguing the iconic US jeweler’s financial mismanagement during the pandemic permits the French luxury goods giant to walk away from its proposed US$16 billion acquisition of the company, reported Bloomberg.
The move comes after Tiffany sued LVMH earlier this month, objecting to the Paris-based company’s decision not to go through with the deal they signed in November because of a French government request and the impact of the coronavirus outbreak.
In its counterclaims filed in Delaware Chancery Court on Monday, September 28, LVMH stated that 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 claimed that Tiffany breached its agreement to operate as usual by paying out the highest possible dividend.
LVMH stated Tiffany stands to profit “far more” if the deal proceeds than as a stand-alone company. Tiffany’s top five executives are in line to receive at least US$100 million in total compensation if the deal moves forward, according to the counterclaims.
