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Image: Louis Vuitton

LVMH Moët Hennessy Louis Vuitton may have had a hand in the letter from a French regulator that it has blamed for sinking its $16.2 billion deal to acquire Tiffany & Co. Despite the Paris-based luxury goods group previously asserting that its decision to pull out of the “iron clad” merger agreement it entered into with Tiffany & Co. in November 2019 was the result of an “unsolicited” letter blocking it from fulfilling the merger agreement, the author of that letter, French Foreign Minister Jean-Yves Le Drian, told Parliament something of a different story on Tuesday.

In a hearing on Tuesday, Mr. Le Drian revealed to French Parliament that the letter he wrote to Bernard Arnault on August 31 –  in which he told the LVMH chairman that he “should defer the closing of the pending Tiffany transaction until January 6, 2021” as a result of the U.S. government’s decision “to implement an additional customs duty on the import of certain French goods” in connection with the two country’s fight over France’s implementation of a digital services tax – came as a result of an inquiry from LVMH. 

To be exact, Mr. Le Drian told Parliament that the letter was the result of “a request” that Louis Vuitton’s parent company “made for government advice,” a remark that the Wall Street Journal describes as calling into question earlier statements by LVMH,” which previously characterized the letter as a “total surprise.” Mr. Le Drian was questioned about the letter by lawmakers on Tuesday, including 34-year old  Les Républicains party member Aurélien Pradié, who accused the French Foreign Minister of flying “to the aid of his board of directors with no legal basis, no solid argument.” 

In addition to the letter, which Tiffany described as “a non-binding advisory letter” in the corporate lawsuit that it filed in Delaware Chancery Court on September 9 against LVMH for walking away from their legally-binding agreement, the French conglomerate has alleged that the management of the COVID crisis by Tiffany’s management and its Board of Directors fell short, enacting the Material Adverse Effect clause in the deal, and thereby, putting the validity of the deal at risk. 

Tiffany & Co. has since pushed back against LVMH’s argument that it “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,” and the New York-based jewelry stalwart has argued, instead, that LVMH is simply looking for a way out of the deal (or looking for a better deal), likely due to the post-COVID drop in the price of Tiffany’s shares compared to the $135 per share price LVMH agreed to pay for them in connection with the November 2019 deal.