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Law360 (September 29, 2020, 10:49 AM EDT ) Tiffany & Co. bit back at LVMH's countersuit in Delaware Chancery Court over the pair's broken $16.2 billion merger, saying Tuesday that arguments made by the French luxury goods company are "baseless and misleading" and mark a "blatant attempt" to avoid paying the agreed-upon price.
Tiffany lambasted LVMH Moet Hennessy Louis Vuitton's claims that Tiffany suffered "devastating and lasting" harm from the COVID-19 pandemic which created a material adverse effect that fatally violated the companies' merger contract, noting that it took LVMH almost three weeks to file its countersuit, according to a statement.
"LVMH's specious arguments are yet another blatant attempt to evade its contractual obligation to pay the agreed-upon price for Tiffany," said Roger Farah, chairman of the board for Tiffany. "Tiffany has acted in full compliance with the Merger Agreement, and we are confident the Court will agree at trial and require specific performance by LVMH."
The companies agreed to merge in November, but have been going at it in court since Sept. 9, when Tiffany lodged its complaint in the Delaware Court of Chancery. On Sept. 10, LVMH said it intended to file a competing lawsuit in Belgium. The company wound up filing a 241-page countersuit in Delaware Chancery Court on Monday.
According to that suit, the deal should be terminated because the effects of the coronavirus pandemic on Tiffany's business constitutes a material adverse effect, which is a common clause in merger agreements that lets parties terminate a transaction under very narrowly defined circumstances.
In addition, LVMH said its business faced an order from the French government barring any closing before Jan. 6, well past the Nov. 24 outside date of the merger deal, because of French concerns over U.S. tariff policies and actions.
According to Tiffany, the order from the French government does not mean the companies can't complete their deal, and LVMH's attempt to point to that order as a reason for the deal's failure is just another excuse. In fact, Tiffany alleged that LVMH actively tried to procure that letter. Additionally, Tiffany said that LVMH has yet to provide it or the court with a copy of the letter.
"Had LVMH actually believed the allegations made in its complaint, there would have been no need for LVMH to procure the letter from the French Foreign Minister as an excuse for its refusal to close," Farah said in Tuesday's press release.
Delaware's Chancery Court already has set a fast-track schedule for the trial on Tiffany's suit. It's scheduled to begin Jan. 5, with the court saying that date will allow time for a ruling and appeals before international antitrust approvals begin to expire.
Vice Chancellor Joseph R. Slights III on Monday appointed Young Conaway Stargatt & Taylor LLP partner Ryan P. Newell to act as a discovery facilitator to speed up pretrial matters.
Also on Tuesday, Tiffany shareholders hit LVMH with a securities fraud suit in New York federal court, saying that they were misled into investing based on bogus assurances by LVMH that the deal would go through and claiming that they have lost millions since the "illegal renunciation" of the merger.
A representative for LVMH did not immediately respond to a request for comment on Tuesday.
Tiffany is represented by Raymond J. DiCamillo, Srinivas M. Raju, Brock E. Czeschin, Angela Lam and Megan E. O'Connor of Richards Layton & Finger PA and Richard C. Pepperman II, Brian T. Frawley, Jacob M. Croke and Katherine L. Bagley of Sullivan & Cromwell LLP.
LVMH and the other defendants are represented by Edward B. Micheletti, Sarah R. Martin, Bonnie W. David, Daniel S. Atlas, Jay B. Kasner, Lauren E. Aguiar, William J. O'Brien III and Vincent M. Chiappini of Skadden Arps Slate Meagher & Flom LLP.
The case is Tiffany & Co. v. LVMH Moet Hennessy Louis Vuitton SE et al., case number 2020-0768, in the Court of Chancery of the State of Delaware.
--Additional reporting by Jeff Montgomery. Editing by Katherine Rautenberg.
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