Blame it on "crisis mismanagement" is the lame excuse cooked up by French luxury goods maker LVMH, which is trying to bail out of its $16B takeover of Tiffany & Co. Sacre bleu!
The truth: LVMH is attempting to squash the acquisition on the orders of the French government as part of its trade war with the US.
That didn't stop LVMH from issuing a press release on Sept. 10 with the headline: "LVMH intends to file a lawsuit against Tiffany as a result of crisis mismanagement." Say what? The company argues that Tiffany is now damaged goods because its management botched the COVID-19 crisis.
LVMH's board claims to have examined Tiffany's first-half results ($32.7M net loss vs. $261.6M year ago profit on a 37 percent sales decline to $1.3B) and determined they were "significantly inferior to those of comparable brands of the LVMH Group." Those haughty French.
That led LVMH to "challenge the handling of the crisis" by Tiffany's management and view the lackluster results as a "material adverse effect" on Tiffany's business.
The French note that Tiffany "did not follow an ordinary course of business, notably in distributing substantial dividends when the company was loss making and that the operation and organization of this company are not substantially intact."
For its part, Tiffany is suing LVMH and refutes suggestions that it can dodge the deal by claiming it has undergone a material adverse effect "or that the transaction is in some way inconsistent with its patriotic duties as a French corporation." Tune in La Marseillaise.
The mudslinging battle between two of the world's top luxury companies certainly is an entertaining diversion in the midst of a global pandemic.
But imagine the tensions between LVMH and Tiffany management, if the court maintains that the deal must go through. That could even be sweeter than the takeover fight.