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French Foreign Minister Says LVMH Query Led to Letter on Tiffany Deal

09/22/2020 | 05:07pm

By Matthew Dalton

PARIS -- French Foreign Minister Jean-Yves Le Drian said he was responding to a query from LVMH Moët Hennessy Louis Vuitton SE when he wrote a letter to the luxury conglomerate asking it to delay its acquisition of Tiffany & Co.

LVMH has blamed its decision to back out of its $16 billion takeover of Tiffany on Mr. Le Drian's letter, saying it was an unsolicited and legally binding government order that blocks the conglomerate from fulfilling the merger agreement.

Appearing before Parliament on Tuesday, Mr. Le Drian said the letter resulted from a request the luxury company made for government advice, a remark that calls into question earlier statements by LVMH.

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."

Mr. Le Drian didn't elaborate on the nature of LVMH's query. His spokeswoman declined to comment further.

LVMH also declined to comment.

Mr. Le Drian's letter, dated Aug. 31, said LVMH should delay its purchase of Tiffany until Jan. 6. The delay would strengthen France's hand in tax and trade negotiations with the U.S., Mr. Le Drian wrote. That would be more than a month after the deadline stipulated in the merger for completing the agreement.

Before Mr. Le Drian sent his letter, LVMH also approached the finance minister, France's lead negotiator in tax talks with the U.S., for help in backing out of its agreement to take over Tiffany, and was turned down, according to senior French officials. LVMH denied the outreach to Bruno Le Maire.

After LVMH announced it was pulling out of the deal, Jean Jacques Guiony, the company's chief financial officer, said Mr. Le Drian's letter came as a "total surprise."

Tiffany filed a lawsuit against LVMH in the Delaware Chancery Court, saying Mr. Le Drian's letter was a pretext for LVMH to back out of the deal. Since then, LVMH has expanded its rationale for pulling out, saying mismanagement of Tiffany during the coronavirus pandemic has invalidated the merger agreement -- an allegation Tiffany denies.

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. The chancery court on Monday set a Jan. 5 date for the trial.

Write to Matthew Dalton at Matthew.Dalton@wsj.com

 

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