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LVMH Files Countersuit Against Tiffany

LVMH Moet Hennessy Louis Vuitton (LVMHF.PK,LVMUY.PK) said that it filed a countersuit against Tiffany & Co. (TIF) in Delaware Chancery Court to walk away from its $16.2 billion acquisition of the U.S. Jeweler.

LVMH said that it continues to have full confidence in its position that the conditions necessary to close the acquisition of Tiffany have not been met and that the spurious arguments put forward by Tiffany are completely unfounded.

The COVID-19 pandemic, whose effects are devastating and lasting on Tiffany, has irrefutably caused a material adverse effect, LVMH said.

LVMH noted that Tiffany's mismanagement of its business constitutes a breach of its obligation to operate in the ordinary course. Tiffany paid the highest possible dividends while the company was burning cash and reporting losses.

LVMH stated that a letter from the Minister of Europe and Foreign Affairs in France makes it impossible to close the transaction with Tiffany before the November 24 termination date in the merger agreement.

LVMH confirmed it has fully met its obligations under the Merger Agreement, including upholding its commitment to use its reasonable best efforts to obtain all regulatory clearances as transparently and promptly as practicable.

Last week, U.S. Court granted Tiffany's motion to expedite lawsuit against LVMH. However, the court has not agreed to Tiffany request for trial before November 24.

The court agreed to a date between the timeline requested by the two companies.

Tiffany had urged the court to hold the trial on a timetable that would enable a decision before the November 24 termination date in the merger agreement. LVMH had reportedly requested to hold the trial in March or April of next year.

But the court set a four-day trial beginning only on January 5, 2021.

Tiffany had said a trial on January 5 would hopefully lead to a ruling prior to the expiration of U.S. antitrust clearance on February 3, 2021.

Tiffany sued LVMH earlier this month after the French luxury goods conglomerate said it could not proceed with its takeover of the U.S. Jeweler.

It was in November last year that LVMH agreed to buy Tiffany for $135 per share in cash. The transaction had an equity value of about 14.7 billion euros or $16.2 billion. Tiffany shareholders approved its proposed acquisition by LVMH in February.

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