LVMH in a tiff over Tiffany takeover

LVMH denies asking a negotiator in France’s tax talks with the US for help in backing out of its agreement to take over Tiffany.

LVMH Moët Hennessy Louis Vuitton asked the top negotiator in France’s tax talks with the US for help in backing out of its agreement to take over Tiffany & Co, and was turned down, according to French officials.

Such outreach, to French Finance Minister Bruno Le Maire, adds a new wrinkle to the luxury conglomerate’s account of why it nixed its $US16.2bn ($22bn) planned acquisition of Tiffany — specifically, its contention that the French government was a driving force in its decision.

LVMH said it never reached out to Mr Le Maire. “LVMH denies these malicious and completely unfounded accusations,” it said.

Last week, LVMH said it was forced to abandon the deal after receiving a letter from a different French official, Foreign Minister Jean-Yves Le Drian, that the luxury goods company said was unsolicited and legally binding. The letter, dated August 31, said LVMH should delay its purchase of Tiffany until January, saying the move would strengthen France’s hand in tax and trade negotiations with the US.

French officials said LVMH reached out to Mr Le Maire about the Tiffany acquisition before Mr Le Drian sent his letter. The company — owner of Louis Vuitton, Dior and other brands — asked Mr Le Maire to write a letter laying the grounds for LVMH to renegotiate or pull out of the merger agreement, the French officials said.

Mr Le Maire refused, the officials said. He was engaged in discussions with US Treasury Secretary Steven Mnuchin over France’s new tax on digital companies such as Facebook and Alphabet’s Google.

Washington says the new tax discriminates against US companies and has threatened to impose tariffs on French luxury goods. France agreed to suspend collection of its digital tax until after January 6, 2021, while international negotiations on the digital tax continue.

French officials said they didn’t view the deal for Tiffany as a potential bargaining chip, because the acquisition was irrelevant to the talks.

Jean Jacques Guiony, LVMH’s chief financial officer, last week denied that the company solicited Mr Le Drian’s letter from the government.

Tiffany filed a lawsuit against LVMH in the Delaware Chancery Court, saying Mr Le Drian’s letter was a pretext for LVMH to back out of the deal.

Since then, LVMH has expanded its rationale for pulling out, saying mismanagement of Tiffany during the coronavirus pandemic has invalidated the merger agreement.