Sep 22, 2020
French presidential palace requested LVMH letter - sources
Sep 22, 2020
France's presidential palace asked Foreign Minister Jean-Yves Le Drian to send luxury goods company LVMH a letter advising it to defer its acquisition of U.S. jeweller Tiffany, two sources familiar with discussions about the letter told Reuters.
LVMH's $16 billion purchase of Tiffany hit the rocks earlier this month after the French company said it could not complete the deal by a Nov. 24 deadline, triggering a legal battle between the two firms.
LVMH cited, in part, an official foreign ministry request to delay closing the deal to January amid trade tensions with the United States. The letter requesting the delay was signed by Le Drian, according to U.S. legal filings by Tiffany and LVMH.
According to the two sources, who spoke on condition of anonymity, the Elysee Palace, President Emmanuel Macron's office, had asked Le Drian to produce the letter.
The Elysee declined to comment. A spokeswoman for the foreign ministry referred enquiries to a representative of Le Drian's, who did not immediately respond.
Asked by Reuters about any interactions between the Elysee Palace and the foreign ministry over the letter, LVMH did not directly address the question.
An LVMH spokesman repeated previous statements denying the company had solicited the letter, and said reports that it did were malicious rumours.
"We formally deny these unfounded rumours," he said, referring to reports of LVMH playing a role in the letter.
The spread of the coronavirus has dealt a huge blow to the luxury sector and raised questions about whether LVMH was overpaying with its $135 a share offer.
LVMH said after the deal fell apart that Tiffany had significantly underperformed LVMH's own comparable brands in the first half of 2020, and said the U.S. group's prospects for 2020 were "very disappointing".
In a lawsuit filed in Delaware to force the deal through, Tiffany said updated forecasts it had provided LVMH in August 2020 projected that the jeweller's earnings for the fourth quarter of 2020 would be greater than the previous year, demonstrating a rapid return to, and surpassing of, its pre-pandemic performance.
Sources told Reuters in June that LVMH's billionaire owner Bernard Arnault, a shrewd deal maker known as the "wolf in cashmere" who has built an empire through acquisitions, was exploring ways to renegotiate the price of the deal.
LVMH has since denied this.
Analysts have said the two sides may still agree to close the deal at a lower price, though some did not rule out that Arnault may have already set his sights on a different prey.
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