Louis Vuitton owner LVMH said Thursday it intends to file a lawsuit in Delaware against Tiffany, arguing the upscale diamond retailer has mismanaged the coronavirus crisisth.
The news comes a day after LVMH announced it would be scrapping its $16.2 billion acquisition of Tiffany, a deal that would have been the biggest ever in the luxury industry. Tiffany then sued LVMH in Delaware to enforce the agreement.
LVMH said Thursday it was “surprised by the lawsuit filed by Tiffany,” calling the action “totally unfounded.”
“LVMH will defend itself vigorously,” the company said in a statement. “The long preparation of this assignment demonstrates the dishonesty of Tiffany in its relations with LVMH. This action is essentially based on the accusation by Tiffany that LVMH failed to take the reasonably necessary steps to obtain the various regulatory authorities’ approvals in a timely way.”
LVMH has argued it can’t complete its acquisition of Tiffany after the French government requested a delay on closing the deal. It also said Tiffany didn’t follow an ordinary course of business during the coronavirus pandemic, for example by extending dividends to shareholders when it was losing money.
It also called Tiffany’s recent financial results and 2020 outlook “very disappointing, and significantly inferior to those of comparable brands of the LVMH Group.”
A representative for Tiffany didn’t immediately respond to CNBC’s request for comment.
Tiffany shares were up slightly in premarket trading Thursday, having closed Wednesday down more than 6%. Shares are down about 14% year-to-date, bringing its market value to $13.8 billion.