French luxury goods group LVMH (MC.PA) said on Thursday it intends to sue US jewellery chain Tiffany (TIF) for “mismanagement” of the COVID-19 crisis, deepening the messy rift between the two companies that had been due to seal a $16bn (£12.3bn) deal.
LVMH said in a statement it would sue Tiffany for “crisis mismanagement,” alleging the company botched its handling of the COVID-19 crisis and destroyed value for LVMH, which had been due to buy the business.
“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 said in a statement. The group owns brands like Louis Vuitton and Christian Dior, as well as jewellery houses such as TAG Heuer and Bulgari.
LVMH accused Tiffany’s executives of “not follow an ordinary course of business, notably in distributing substantial dividends when the company was loss making.”
The French company argued that the terms of November’s takeover deal had therefore been breached and “the necessary conditions for the conclusion of the acquisition of Tiffany are not fulfilled.”
LVMH’s notice comes a day after it announced it was walking away from plans to buy Tiffany for $16bn. Since the deal was announced last year, the COVID-19 crisis has hit the global luxury market and trade tensions have flared between the US and France.
Tiffany said on Wednesday it would sue LVMH to try and force completion of the takeover. The jewellery business accused LVMH of slow rolling paperwork on the acquisition in an attempt to intentionally scupper the deal.
LVMH said the lawsuit was “totally unfounded” and “defamatory,” promising to “defend itself vigorously.”
“The long preparation of this assignment demonstrates the dishonesty of Tiffany in its relations with LVMH,” the company said on Thursday.
Shares in LVMH were down 0.7% in Paris by early afternoon. Tiffany shares were up almost half a percent in the pre-market in New York, having closed down 6.4% on Wednesday.