The world’s biggest luxury group LVMH filed a countersuit against New York-based Tiffany & Co in a Delaware court on Monday, claiming conditions to close its $16bn buyout of the luxury jewellery retailer were not met.
The countersuit follows legal action launched by Tiffany earlier this month after LVMH backed out of its takeover.
"LVMH 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 owner of Louis Vuitton said in a regulatory filing on Tuesday.
LVMH said that a 'Material Adverse Effect' has occurred, citing the "devastating and lasting" impact the Covid-19 pandemic would have on Tiffany's business. It also said the jewellery retailer mismanaged the business through the pandemic, for example, by paying "the highest possible dividends while the company was burning cash and reporting losses".
It also said the jeweller took on additional debt while slashing capital and marketing investments.
The Louis Vuitton owner said its board had assessed the financials of Tiffany and its management during the Covd-19 crisis. It said the jeweller’s first half results and performance for 2020 “are very disappointing and significantly inferior to those of comparable brands of the LVMH Group during this period”.
In its regulatory filing, LVMH, run by Bernard Arnault, the world’s fourth richest man, insists it has fully met its obligations under the merger agreement, including obtaining all regulatory clearances.
Tiffany filed its lawsuit against LVMH earlier this month after LVMH backed out of the deal, citing a letter from the French foreign minister instructing it to delay the deal until January next year "in reaction to the threat of taxes on French products by the US".
The jeweller described LVMH's counterclaim as "baseless and misleading" in a statement on Tuesday, stating that LVMH had offered no support for its claim that it had failed to operate in the ordinary course of business.
“LVMH’s specious arguments are yet another blatant attempt to evade its contractual obligation to pay the agreed-upon price for Tiffany," Roger Farah, chairman of Tiffany's board, said in a statement.
"Tiffany has acted in full compliance with the merger agreement, and we are confident the court will agree at trial. Had LVMH actually believed the allegations made in its complaint, there would have been no need for LVMH to procure the letter from the French foreign minister as an excuse for its refusal to close.”
The onset of Covid-19 crimped economic growth and dented the sales of the global luxury goods market. However, Tiffany said that it had only experienced a single quarter of losses before returning to profitability and is projecting higher fourth quarter earnings in 2020 than in the same period last year.
“I am so proud of how Tiffany has gone above and beyond during the pandemic to deliver our brand mission and keep delighting our customers, even in the most uncertain of times," chief executive Alessandro Bogliolo said.
Tiffany filed a motion to expedite the hearing, which the court in Delaware granted earlier this month. A trial date has been scheduled for January 5 next year.
LVMH's acquisition would have been the biggest ever in the luxury industry and was meant to expand LVMH’s relatively modest presence in jewellery. Terms were agreed before the onset of the coronavirus.
Tips on buying property during a pandemic
Islay Robinson, group chief executive of mortgage broker Enness Global, offers his advice on buying property in today's market.
While many have been quick to call a market collapse, this simply isn’t what we’re seeing on the ground. Many pockets of the global property market, including London and the UAE, continue to be compelling locations to invest in real estate.
While an air of uncertainty remains, the outlook is far better than anyone could have predicted. However, it is still important to consider the wider threat posed by Covid-19 when buying bricks and mortar.
Anything with outside space, gardens and private entrances is a must and these property features will see your investment keep its value should the pandemic drag on. In contrast, flats and particularly high-rise developments are falling in popularity and investors should avoid them at all costs.
Attractive investment property can be hard to find amid strong demand and heightened buyer activity. When you do find one, be prepared to move hard and fast to secure it. If you have your finances in order, this shouldn’t be an issue.
Lenders continue to lend and rates remain at an all-time low, so utilise this. There is no point in tying up cash when you can keep this liquidity to maximise other opportunities.
Keep your head and, as always when investing, take the long-term view. External factors such as coronavirus or Brexit will present challenges in the short-term, but the long-term outlook remains strong.
Finally, keep an eye on your currency. Whenever currency fluctuations favour foreign buyers, you can bet that demand will increase, as they act to secure what is essentially a discounted property.
Sheikh Zayed's poem
When it is unveiled at Abu Dhabi Art, the Standing Tall exhibition will appear as an interplay of poetry and art. The 100 scarves are 100 fragments surrounding five, figurative, female sculptures, and both sculptures and scarves are hand-embroidered by a group of refugee women artisans, who used the Palestinian cross-stitch embroidery art of tatreez. Fragments of Sheikh Zayed’s poem Your Love is Ruling My Heart, written in Arabic as a love poem to his nation, are embroidered onto both the sculptures and the scarves. Here is the English translation.
Your love is ruling over my heart
Your love is ruling over my heart, even a mountain can’t bear all of it
Woe for my heart of such a love, if it befell it and made it its home
You came on me like a gleaming sun, you are the cure for my soul of its sickness
Be lenient on me, oh tender one, and have mercy on who because of you is in ruins
You are like the Ajeed Al-reem [leader of the gazelle herd] for my country, the source of all of its knowledge
You waddle even when you stand still, with feet white like the blooming of the dates of the palm
Oh, who wishes to deprive me of sleep, the night has ended and I still have not seen you
You are the cure for my sickness and my support, you dried my throat up let me go and damp it
Help me, oh children of mine, for in his love my life will pass me by.
Background: Chemical Weapons
Wicked: For Good
Director: Jon M Chu
Starring: Ariana Grande, Cynthia Erivo, Jonathan Bailey, Jeff Goldblum, Michelle Yeoh, Ethan Slater
Rating: 4/5
How to improve Arabic reading in early years
One 45-minute class per week in Standard Arabic is not sufficient
The goal should be for grade 1 and 2 students to become fluent readers
Subjects like technology, social studies, science can be taught in later grades
Grade 1 curricula should include oral instruction in Standard Arabic
First graders must regularly practice individual letters and combinations
Time should be slotted in class to read longer passages in early grades
Improve the appearance of textbooks
Revision of curriculum should be undertaken as per research findings
Conjugations of most common verb forms should be taught
Systematic learning of Standard Arabic grammar
LILO & STITCH
Starring: Sydney Elizebeth Agudong, Maia Kealoha, Chris Sanders
Director: Dean Fleischer Camp
Rating: 4.5/5
The Porpoise
By Mark Haddon
(Penguin Random House)
