Planned takeover by LVMH: sale of jeweler Tiffany wobbles

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Michel Euler / AP

Bernard Arnault had pictured it so beautifully.

The French billionaire already spoke of the possibility of creating a new company with cult status when the shareholders of his LVMH group agreed to take over Tiffany.

But now the takeover of the legendary New York jeweler by the French luxury goods company is facing major problems, and Tiffany has already announced a lawsuit against LVMH.

The French company around the bag and jewelry brand Louis Vuitton has surprisingly announced that it is currently "not in a position" to complete the takeover.

The background is apparently the trade dispute between the EU and the USA.

LVMH has been informed that French products may be taxed in the USA.

In addition, LVMH had taken note of a motion from Tiffany, according to which the deadline for the planned merger should be extended to December 31, 2020.

So far, the plan was to close the transaction on November 24th at the latest.

Share prices of both companies in the red

The LVMH group, led by Bernard Arnault, owns more than 70 luxury brands, including Louis Vuitton, Moët Chandon and Bulgari.

The acquisition would be the most expensive deal in LVMH's history.

News of the troubles drove the stocks of both companies down.

Tiffany shares initially fell by around 15 percent in pre-market US trading and were last around 8 percent in the red.

The LVMH papers lost around 1 percent in Paris.

Both companies had agreed the deal for the record sum of a good 16 billion dollars (around 13.6 billion euros) last November.

But now the French luxury company announced after a board meeting that "a series of events" made the deal more difficult.

LVMH cites a letter from the French Foreign Ministry calling on the company to "postpone the takeover of Tiffany until after January 6, 2021".

Tiffany insists that the deal be closed by the end of the year at the latest.

With the announced lawsuit, Tiffany wants to oblige the French to carry out the agreed transaction.

The New York jewelry manufacturer has been world famous since the 1961 Hollywood film "Breakfast at Tiffany's" starring Audrey Hepburn.

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apr / AFP / dpa-AFX