LVMH confirms it has submitted Tiffany transaction for approval by the European Commission

“LVMH confirmed on the 18 September that immediately after receiving approval to proceed by the European Commission, it has submitted the proposed acquisition of Tiffany for antitrust review, as it has always stated it would do.

Eight of the ten requisite antitrust clearances have already been obtained. LVMH expects to receive approval from the European Commission and Taiwan well before the November 24, 2020 Outside Date.

On the 16 September LVMH submitted to the Chancery Court of Delaware its conclusions, seeking that the Court dismiss Tiffany’s request to issue a decision within a short timeframe that would be incompatible with a dispassionate ruling.

There are no objective reasons why the upcoming trial should not take place within a normal timeframe.

By asking the courts to rule urgently – and by communicating feverishly and hastily – Tiffany’s executives are clearly seeking to avoid having to answer, notably to their shareholders, for their bad results and mismanagement and to see their arguments fall one after the other.

Indeed, they know full well, on the one hand, that the authorizations of the competition authorities will be obtained significantly before November 24, so their grievances against LVMH on this issue are groundless and, on the other hand, that the next Tiffany results will only confirm the occurrence of a “material adverse effect” and the mediocrity of their management during the crisis, which mainly consisted in creating losses and increasing debts to the detriment of the company’s interest.

In this respect, the assertions by Tiffany’s current management that “the 4th quarter 2020 profits will be higher than those of the previous year” are purely fanciful, even worrying. The only way to even come close to this target would be to strongly curtail all current investments, particularly in marketing and communications, which is obviously detrimental to the future of the brand and totally contrary to the normal course of business.

There is no reason for this case to be judged urgently. Given the legal and financial issues at stake – in the context of a pandemic that obviously weighs on the ability of a European group to organize its defense in the United States – it seems to LVMH that sound justice requires that a reasonable time be granted to rule on the matter.

Tiffany clearly fears a serene and fair rendering of justice. LVMH, for its part, has full confidence in the American justice system to demonstrate that the conditions necessary for the acquisition of Tiffany are no longer met and that the fallacious arguments put forward by Tiffany are unfounded.

It is up to the Delaware Court to determine who is in his right, and not the Chairman of Tiffany through the press.”

In a press release issued on the 10 September, LVMH issues a press release which stated:

LVMH was surprised by the lawsuit filed by Tiffany against the Group in the Court of Chancery of the State of Delaware. LVMH considers that this action is totally unfounded. It has clearly been prepared by Tiffany a long time ago and communicated in a misleading way to shareholders and is defamatory. LVMH will defend itself vigorously. The long preparation of this assignment demonstrates the dishonesty of Tiffany in its relations with LVMH. This action is essentially based on the accusation by Tiffany that LVMH failed to take the reasonably necessary steps to obtain the various regulatory authorities’ approvals in a timely way. This accusation has no substance and LVMH will demonstrate this to the Delaware Court. On this matter, the filing in Brussels will take place, as expected, in the following days and this is simply the result of the planning fixed by the European Commission, about which Tiffany is completely aware. It is legitimate to expect this authorization will be obtained in October.

The LVMH Board, besides the elements already raised, had the opportunity to examine the current economic situation of Tiffany and its management of the crisis. It noted that the first half results and its perspectives for 2020 are very disappointing, and significantly inferior to those of comparable brands of the LVMH Group during this period.

LVMH will be therefore led to challenge the handling of the crisis by Tiffany’s management and its Board of Directors. LVMH considers, among other things, that this period is impacted by a Material Adverse Effect, that Tiffany did not follow an ordinary course of business, notably in distributing substantial dividends when the company was loss making and that the operation and organization of this company are not substantially intact.

LVMH therefore confirms that the necessary conditions for the conclusion of the acquisition of Tiffany are not fulfilled.”