Reiterates contractual requirement to complete
transaction on agreed terms
Tiffany & Co. (NYSE: TIF) today responded to baseless and
misleading counterclaims finally filed yesterday by LVMH Moët
Hennessy-Louis Vuitton SE (“LVMH”) in Delaware Chancery Court -- 18
days after LVMH said it intended to assert claims.
Chairman of the Board Roger Farah said, “LVMH’s specious
arguments are yet another blatant attempt to evade its contractual
obligation to pay the agreed-upon price for Tiffany. Tiffany has
acted in full compliance with the Merger Agreement, and we are
confident the Court will agree at trial and require specific
performance by LVMH. Had LVMH actually believed the allegations
made in its complaint, there would have been no need for LVMH to
procure the letter from the French Foreign Minister as an excuse
for its refusal to close.”
Chief Executive Officer Alessandro Bogliolo said, “I am so proud
of how Tiffany has gone above and beyond during the pandemic to
deliver our brand mission and keep delighting our customers, even
in the most uncertain of times. I want to thank the entire Tiffany
team for their continued professionalism and dedication in the face
of baseless accusations and misinformation.”
In response to LVMH’s allegations, Tiffany reiterated several
key points:
More Evidence of LVMH’s Bad Faith
Continues to Come to Light In early September, LVMH
stated publicly that it would be unable to complete its acquisition
of Tiffany because it had received a directive from a French
government official that prohibits the acquisition prior to the
outside date under the Merger Agreement. LVMH subsequently asserted
publicly that the letter was not solicited by LVMH. However, on the
floor of the French parliament last week, the Minister who signed
the letter admitted that he only sent the letter in response to an
inquiry from LVMH. Despite Tiffany’s many requests, LVMH still has
not provided Tiffany or the Court with a copy of the letter. LVMH’s
seeking this letter was a clear violation of its obligations under
the Merger Agreement, and Tiffany anticipates that more of LVMH’s
duplicity will come to light during the trial.
LVMH’s Claim of a Material Adverse
Effect Is Baseless LVMH’s claim of a Material Adverse
Effect (MAE) is baseless and still has no factual, contractual or
legal support. As previously stated, Tiffany experienced a single
quarter of losses before returning to profitability and projects
fourth-quarter earnings in 2020 greater than those in the same
period in 2019 — the exact opposite of LVMH’s unsupported claims
that the “Pandemic has devastated Tiffany’s business” and that
“Tiffany’s recent woes are just the beginning of its troubles.”
Nothing alleged by LVMH has come close to meeting the MAE
definition in the Merger Agreement, which excludes all “changes or
conditions generally affecting the industries in which [Tiffany]
operate[s]” and “general economic or political conditions.”
Tiffany Has Operated in the Ordinary
Course LVMH has still offered no support for its claim
that Tiffany breached its obligation to conduct its business in the
ordinary course. LVMH’s criticism of Tiffany’s payment of dividends
continues to ignore the fact that those payments were not just
“technically permitted”; they were expressly authorized by the
Merger Agreement and excluded from any “ordinary course”
limitations. In any event, dating back to shortly after its 1987
IPO, Tiffany has never missed or reduced a dividend payment, even
during recessions, financial crises and the September 11 attacks,
spanning 131 consecutive quarters. As of September 25, 2020,
Tiffany has more than $1.2 billion in cash and has no liquidity
constraints. The real reason LVMH complains about the dividend
payments is that it wanted the cash left in the company for its
benefit rather than paid to Tiffany shareholders as negotiated in
the Merger Agreement.
LVMH also criticizes Tiffany for closing its stores in Arizona,
Florida and Texas “five days to over two weeks” before the closures
were mandated by law in those states. LVMH cannot show that the
steps Tiffany took to protect the health and welfare of its
employees and customers during the pandemic violated the Merger
Agreement. Tiffany took swift action around the world to protect
the safety of its stakeholders during the pandemic, and those
actions were entirely consistent with its legal obligations, its
Code of Business and Ethical Conduct, and its brand and corporate
identity. The fact that LVMH felt compelled to even suggest that
Tiffany’s decision to close a limited number of stores “five days
to over two weeks” early in order to protect employees and
customers provides adequate grounds to walk away from its
contractual obligations underscores the obvious weakness of its
case.
Tiffany Was Not At Risk of Breaching
Debt Covenants LVMH’s suggestion that Tiffany secretly
negotiated amendments to credit facilities to avoid breaching debt
covenants and “improperly” drew down additional debt is misleading.
In reality, Tiffany proactively and prudently sought to gain
additional flexibility under its credit facilities in the face of
uncertainty related to the pandemic, similar to the actions taken
by numerous other businesses in many industries. Moreover, these
actions were permitted under the Merger Agreement, and not a penny
of the money that was drawn down out of an abundance of caution has
yet to be spent.
LVMH’s Efforts to Deny its Interference
in the Regulatory Approvals Process are Shameless LVMH’s
efforts to shift the blame for foot-dragging in the regulatory
process cannot hide the fact that LVMH took almost 10 months even
to submit its notification to start the clock on the European
Commission’s merger clearance process – and only did so after
Tiffany filed a lawsuit against it. LVMH’s breach has resulted in a
delay in closing the merger that should have occurred at the end of
June so the harm to Tiffany and its shareholders is significant and
ongoing.
About Tiffany & Co. In 1837, Charles Lewis Tiffany
founded his company in New York City where his store was soon
acclaimed as the palace of jewels for its exceptional gemstones.
Since then, TIFFANY & CO. has become synonymous with elegance,
innovative design, fine craftsmanship and creative excellence.
During the 20th century, its fame thrived worldwide with store
network expansion and continuous cultural relevance, as exemplified
by Truman Capote’s Breakfast at Tiffany’s and the film starring
Audrey Hepburn.
Today, with more than 14,000 employees, TIFFANY & CO. and
its subsidiaries design, manufacture and market jewelry, watches
and luxury accessories - including nearly 5,000 skilled artisans
who cut diamonds and craft jewelry in the Company’s workshops,
realizing its commitment to superlative quality. TIFFANY & CO.
has a long-standing commitment to conducting its business
responsibly, sustaining the natural environment, prioritizing
diversity and inclusion, and positively impacting the communities
in which we operate.
The Company operates more than 300 TIFFANY & CO. retail
stores worldwide as part of its omni-channel approach. To learn
more about TIFFANY & CO., as well as its commitment to
sustainability, please visit www.tiffany.com.
Forward-Looking Statements: Certain
statements in this release including, without limitation,
statements relating to the pending merger and conditions to closing
of the pending merger as well as statements that refer to
expectations for Tiffany’s performance in future periods, may
constitute “forward-looking statements” within the meaning of
Section 27A of the Securities Act of 1933, Section 21E of the
Securities Exchange Act of 1934 and the Private Securities
Litigation Reform Act of 1995, each as amended. Forward-looking
statements by their nature address matters that are, to different
degrees, uncertain, such as statements about the consummation of
the merger and about the future plans, assumptions and expectations
for Tiffany’s business and its results. Forward-looking statements
provide current expectations of future events and include any
statement that does not directly relate to any historical or
current fact. Words such as “anticipates,” “believes,” “expects,”
“intends,” “plans,” “projects,” “may,” “will,” or other similar
expressions may identify such forward-looking statements.
These and other forward-looking statements are not guarantees of
future results and are subject to risks, uncertainties and
assumptions that could cause actual results to differ materially
from those discussed in forward-looking statements, including, as a
result of factors, risks and uncertainties over which we have no
control. The inclusion of such statements should not be regarded as
a representation that any plans, estimates or expectations will be
achieved. You should not place undue reliance on such statements.
Important factors, risks and uncertainties that could cause actual
results to differ materially from such plans, estimates or
expectations include, but are not limited to, the following: (i)
conditions to the completion of the merger may not be satisfied or
the regulatory approvals required for the merger may not be
obtained, in each case, on the terms expected or on the anticipated
schedule; (ii) the occurrence of any event, change or other
circumstance that could give rise to the termination of the Merger
Agreement or affect the ability of the parties to recognize the
benefits of the merger; (iii) the effect of the announcement or
pendency of the merger on Tiffany’s business relationships,
operating results, and business generally; (iv) risks that the
merger disrupts Tiffany’s current plans and operations and
potential difficulties in Tiffany’s employee retention; (v) risks
that the merger may divert management’s attention from Tiffany’s
ongoing business operations; (vi) potential litigation that may be
instituted against Tiffany or its directors or officers related to
the merger or the Merger Agreement and any adverse outcome of any
such potential litigation; (vii) the amount and timing of the
costs, fees, expenses and other charges related to the merger,
including in the event of any unexpected delays and in light of the
pending merger-related litigation; (viii) other risks to
consummation of the merger, including the risk that the merger will
not be consummated within the expected time period, or at all,
which may affect Tiffany’s business and the price of the common
stock of Tiffany; (ix) any adverse effects on Tiffany by other
general industry, economic, business and/or competitive factors;
(x) the COVID-19 pandemic, including the duration and scope
thereof, the availability of a vaccine or cure that mitigates the
effect of the virus, the potential for additional waves of
outbreaks and changes in financial, business, travel and tourism,
consumer discretionary spending and other general consumer
behaviors, political, public health and other conditions,
circumstances, requirements and practices resulting therefrom; (xi)
protest activity in the U.S.; and (xii) such other factors as are
set forth in Tiffany’s periodic public filings with the SEC,
including but not limited to those described under the headings
“Risk Factors” and “Forward Looking Statements” in its most
recently filed Form 10-Q for the quarter ended July 31, 2020, its
Form 10-K for the fiscal year ended January 31, 2020, the
definitive proxy statement on Schedule 14A, filed with the SEC on
January 6, 2020, and in its other filings made with the SEC from
time to time, which are available via the SEC’s website at
www.sec.gov. Consequences of material differences in results as
compared with those anticipated in the forward-looking statements
could include, among other things, business disruption, operational
problems, financial loss, legal liability to third parties and
similar risks, any of which could have a material adverse effect on
Tiffany’s financial condition, results of operations, credit
rating, liquidity or stock price. In addition, there can be no
assurance that the merger will be completed, or if it is completed,
that it will close in the timeframe previously anticipated, or that
the expected benefits of the merger will be realized. Because
Tiffany does not know when, or if, the merger will be completed,
Tiffany has not included certain costs related to the closing of
the merger, such as advisor fees, litigation-related expenses, and
expenses related to the acceleration of equity pursuant to the
terms of the Merger Agreement, in its financial forecasts for the
remainder of the fiscal year ending January 31, 2021 or any future
period. These expenses are expected to be significant, although the
vast majority of these costs will only be incurred if and when the
merger is ultimately completed.
Forward-looking statements reflect the views and assumptions of
management as of the date of this release with respect to future
events. Tiffany does not undertake, and hereby disclaims, any
obligation, unless required to do so by applicable securities laws,
to update any forward-looking statements as a result of new
information, future events or other factors. The inclusion of any
statement in this release does not constitute an admission by
Tiffany or any other person that the events or circumstances
described in such statement are material.
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version on businesswire.com: https://www.businesswire.com/news/home/20200929005584/en/
Jason Wong (973) 254-7612 jason.wong@tiffany.com
Tiffany (NYSE:TIF)
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