Tiffany alleged that LVMH was slow-walking through regulatory approvals © Bloomberg

Tiffany’s flagship store on Fifth Avenue in Manhattan is next door to Trump Tower. Fittingly, the jeweller’s $16.6bn sale to LVMH has become entangled in a trade war. The French luxury group says it cannot close the deal in November. The French government, riled by a threatened US tariffs, does not want it to, apparently.

This must suit LVMH boss Bernard Arnault. LVMH’s misgivings about paying the huge premium it agreed before the pandemic have been well-telegraphed for months. Tiffany’s shares have traded at a reasonable discount to the price of $135 specified in the agreement.

Still, merger contracts are typically bomb-proof. Few buyers ever wriggle out of them. LVMH has brought a typically inventive and particularly French twist to the problem — relying on the government to meddle in an international takeover.

Mr Arnault is no stranger to knife-edge tactics. Perhaps Tiffany will simply cut its asking price to make the row go away. Equally, LVMH’s tough tactics may provoke Tiffany to pursue a long, expensive legal case. These are a counterpoised American speciality.

Tiffany just filed a suit seeking to enforce the merger agreement. In its complaint, it said LVMH had been trying to prove that Tiffany had suffered a “material adverse effect” — pandemic damage so bad LVMH could legitimately reconsider its bid. These so-called MAC clauses have almost never given buyers an escape hatch.

Tiffany also alleged LVMH was slow-walking through regulatory approvals so the deal would not get done before the agreed-upon drop-dead date of November 24 2020. The letter from the French government, Tiffany believes, is just the latest stalling tactic.

The jeweller is almost certainly no longer worth $135 per share — if it ever was. But the slide in value could have occurred after closing the deal. US courts are rarely convinced the situation is any different when the decline follows the deal’s signing. But the curious reality is that for France, LVMH genuinely is a strategic business — a label ministers were once ridiculed for applying to yoghurt maker Danone.

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