Louis Vuitton owner LVMH pulls out of its $16 billion takeover of Tiffany & Co.

• French luxury goods conglomerate LVMH announced on Wednesday morning that it was pulling out of deal to buy New York-based jeweler Tiffany & Co.
• The $16.2 billion transaction would have been the largest in the history of luxury retail.
• The announcement came immediately after Tiffany said it would take legal action against LVMH, accusing the French company of deliberately delaying the takeover.

French luxury goods giant LVMH will pull out of its $16 billion takeover of Tiffany & Co after a series of delays that "undermined" the deal, it said in a statement on Wednesday.

Tiffany announced it would file a lawsuit against the conglomerate to try and force through the acquisition, and accused LVMH of finding an excuse not to pay the agreed price.

LVMH, which owns 75 brands including Louis Vuitton and Dior, said it had received a letter from the French government asking it to delay the deal to January 2021, in response to US threats of tariffs on French imports. Tiffany had separately requested the deadline for the deal be pushed back from November 24 to December 31, LVMH said.

"As a results of these elements ... LVMH will therefore not be able to complete the acquisition of Tiffany & Co," it said in a statement.

On Wednesday, Tiffany announced that it would file a lawsuit to force LVMH to complete the acquisition by November 24. It accused the French firm of deliberately delaying the deal, and said LVMH had threatened to abandon the takeover unless the price of the transaction was reduced.

"We believe that LVMH will seek to use any available means in an attempt to avoid closing the transaction on the agreed terms," Tiffany chairman Roger Farah said. There "was no basis under French law" for the French government to ask LVMH to delay the deal, he added.

In its statement, the New York-based jeweler referred to "LVMH's baseless, opportunistic attempts to use the US social justice protests and the COVID-19 pandemic to avoid paying the agreed price for Tiffany shares."

Deal has looked unsteady for months

LVMH first announced its acquisition of the luxury jeweler in November 2019, and said it expected the transaction to close in mid-2020. At $16.2 billion, it would have been the largest-ever takeover in the luxury goods sector.

The takeover has looked unsteady for a while. In June, LVMH's board expressed concerns about the pandemic and questioned whether Tiffany could cover all its debt covenants at the end of the transaction. That same month, LVMH's CEO Bernard Arnault mulled ideas about how the group could pressure Tiffany to lower the agreed $135-per-share takeover price.

In July, LVMH said antitrust filings related to the deal were still being processed in around six countries. It said that the pandemic and Black Lives Matter protests had caused delays.

Though competition regulators in China and the US have already cleared the acquisition, LVMH hasn't filed for approval in the EU and Taiwan, Tiffany claimed in its statement. It said LVMH deliberately stalled this process. LVMH didn't tell Tiffany about the French government letter until a week after it was received, the US jeweler claims, arguing this amounts to a breach of the transaction agreement.

Since LVMH pulled out of the takeover, Tiffany's shares have fallen by as much as 9.3%.

The luxury goods industry has suffered during the pandemic, and Tiffany is no exception. The company recorded its first quarterly loss in six years over the first quarter, though sales have since improved.