PARIS (Reuters) – French Finance Minister Bruno Le Maire said Foreign Minister Jean-Yves Le Drian was within his rights to ask LVMH to postpone a takeover of U.S. jeweler Tiffany, an intervention that threatens to derail the deal.
Last week, French luxury goods giant LVMH said it could no longer complete the $16 billion acquisition after receiving a letter from Le Drian. It said the letter asked LVMH to delay the deal to beyond Jan. 6, 2021, given the threat of additional U.S. tariffs against French products.
“Mr Le Drian took the decision which appeared to him to be the right one,” Le Maire told France 2 television on Monday, adding that the foreign minister was working to protect French interests in his intervention.
Tiffany is suing LVMH, alleging it is using the French minister’s request as a pretext to back out of the takeover – which was agreed last year, before the COVID-19 pandemic hit the luxury sector hard.
LVMH, which owns brands such as Louis Vuitton, denies the allegation. The company, led by billionaire Bernard Arnault, said it would counter-sue Tiffany, accusing it of mismanagement during the health crisis.
LVMH is expected to file its own lawsuit this week, according to a source close to the matter.
A judge in Delaware, where Tiffany is registered, scheduled a Sept. 21 hearing for the U.S. company to argue for expedited proceedings of its lawsuit seeking to hold LVMH to its proposed merger, according to a Monday court filing.
LVMH shares were up 0.7% by 1455 GMT on Monday, while Tiffany shares were up 0.8% at $113 – compared with an agreed takeover cash price of $135 a share.
“Hiding behind the French government is just an excuse for LVMH,” said Ion-Marc Valahu, a fund manager at Geneva-based firm Clairinvest.
“The reality is that they’re seeing what’s happening with COVID, and the fact that no-one is going out shopping, and they may be looking to see if they can get Tiffany at a lower price.”
LVMH has denied Tiffany’s accusation that it is trying to negotiate a lower price, saying the terms of the original merger agreement does not allow it to do so.
(Reporting by Sudip Kar-Gupta and Jean-Stephane Brosse; Editing by Silvia Aloisi and Pravin Char)
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