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The crux of the argument LVMH plans to present at a January trial it very much wishes wasn’t happening is that it had no choice but to back out of what—in light of the coronavirus pandemic, not that that has anything to do with it—looks like a very expensive $16 billion deal for Tiffany & Co. You see, the luxury goods conglomerate plans to tell Delaware Chancery Court, the republic for which it stands, in this case the Republic of France, ordered it to put on the brakes for the benefit of its homeland, in order to give it leverage in the meticulously scheduled trade war with the United States set to break out on Jan. 6, which also just happens to be well past the deal closing on the calendar for November, so they guess we’ll just have to call the whole thing off.

Strictly speaking, the basis of that argument is true: French Foreign Minister Jean-Yves Le Drian did send LVMH a letter instructing or at the very least suggesting it not to buy Tiffany until next year, although the legally-binding nature of that order or request is open to question. Also open to question is how, exactly, that letter came about. After all, LVMH reportedly asked Le Drian’s colleague, Finance Minister Bruno Le Maire, to help it scotch the deal, which request was swiftly rejected. The company has emphatically denied that “malicious and completely unfounded accusation,” much as it has called Le Drian’s letter “unsolicited” and a “total surprise.” That description, frankly, sounds like a total surprise to M. Le Drian.

Aurélien Pradié, a lawmaker with the conservative Les Republicains party, asked Mr. Le Drian why he sent the letter, which was addressed to Bernard Arnault, LVMH’s chief executive and controlling shareholder. “You flew to the aid of his board of directors with no legal basis, no solid argument,” Mr. Pradié said.

Mr. Le Drian said part of his job is to respond to the political questions of French companies, particularly concerning the U.S.

“My role is to apply, if necessary, the government’s opinion on assessments of a political nature on the management of major international events to come,” Mr. Le Drian said. “This is the reason why I answered a question from the LVMH group, totally in my role.”

That certainly sounds bad, and very much like something Vice Chancellor Joseph Slights III will want to hear about come Jan. 5, and might even lead him to conclude that Tiffany shareholders are entitled to their $16 billion from LVMH, or at least a few billion in compensation for being left at the altar, since, you know, LVMH looks like they might have torpedoed their own deal and then lied through their teeth about it. Certainly, it’s not something LVMH wants to talk about.

Last Wednesday, LVMH said in a court filing responding to Tiffany’s lawsuit that U.S. legal doctrine precludes courts from questioning the validity of Mr. Le Drian’s letter.

French Foreign Minister Says LVMD Query Led to Letter on Tiffany Deal [WSJ]
LVMH Sought French Government Help in Dropping Tiffany Takeover [WSJ]



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