LVMH's is trying to walk away from its blockbuster deal for Tiffany.

The engagement is not only off — it’s getting ugly.

LVMH Moët Hennessy Louis Vuitton, which said Wednesday it would not go ahead with its planned $16.2-billion acquisition of Tiffany & Co., said it now plans to take legal action against the American jeweler, accusing it of “dishonesty” and mismanagement during the coronavirus crisis.

It also charged that Tiffany’s lawsuit in the Court of Chancery of the State of Delaware was “communicated in a misleading way to shareholders and is defamatory.”

The suit is to try to compel LVMH to “abide by its contractual obligation under the merger agreement.”

In a brief statement Thursday, LVMH said it was surprised by the legal action, which it deems “totally unfounded.”

“LVMH will defend itself vigorously. The long preparation of this assignment demonstrates the dishonesty of Tiffany in its relations with LVMH. This action is essentially based on the accusation by Tiffany that LVMH failed to take the reasonably necessary steps to obtain the various regulatory authorities’ approvals in a timely way,” the statement said. “This accusation has no substance and LVMH will demonstrate this to the Delaware Court. On this matter, the filing in Brussels will take place, as expected, in the following days and this is simply the result of the planning fixed by the European Commission, about which Tiffany is completely aware. It is legitimate to expect this authorization will be obtained in October.”

LVMH also reiterated its disappointment in Tiffany’s management during the coronavirus crisis, which has put a strong dent in luxury sales and consumer appetite, and vowed to challenge it and its board of directors on this failing.

“The first-half results and its perspectives for 2020 are very disappointing, and significantly inferior to those of comparable brands of the LVMH Group during this period,” it said. “LVMH considers, among other things, that this period is impacted by a Material Adverse Effect, that Tiffany 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.”

Material Adverse Effect clauses are typical in large merger and acquisition deals in case a change in circumstances significantly reduces the value of a company.

“LVMH therefore confirms that the necessary conditions for the conclusion of the acquisition of Tiffany are not fulfilled,” LVMH added.

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Let the Lawsuits Begin: LVMH Walks Away From Tiffany

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