A huge update in the deal between major jeweler Tiffany & Co. (NYSE:TIF) and French luxury group LVMH (OTCMKTS:LVMUY) has TIF stock falling hard on Wednesday.
This is because LVMH announced that it was backing out of its $16.2 billion deal with the New York City-based jeweler. And while the company did not cite a specific reason, the release does state that the decision comes “after a succession of events which undermine the acquisition of Tiffany & Co.” In turn, Tiffany & Co. announced Wednesday that it will seek legal action against LVMH to enforce the agreement.
Roger N. Farah, chairman of Tiffany & Co., had this to say about the lawsuit:
“We regret having to take this action but LVMH has left us no choice but to commence litigation to protect our company and our shareholders. Tiffany is confident it has complied with all of its obligations under the Merger Agreement and is committed to completing the transaction on the terms agreed to last year. Tiffany expects the same of LVMH.”
Moreover, this is not the first time that the deal has had issues. Back in June, LVMH said that it would not buy shares of TIF stock with the deal due to the effects of the novel coronavirus on the businesses. That said, Tiffany & Co. touched on how this latest move by LVMH compares to the one in June:
“Tiffany believes this latest development represents nothing more than LVMH’s most recent effort to avoid its obligation to complete the transaction on the agreed terms, not dissimilar from LVMH’s baseless, opportunistic attempts to use the U.S. social justice protests and the COVID-19 pandemic to avoid paying the agreed price for Tiffany shares.”
TIF stock is down 8.2% as of Wednesday afternoon.
On the date of publication, Nick Clarkson did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Nick is a web editor at InvestorPlace.
