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  • After announcing a record-breaking deal last November, LVMH Moët Hennessy Louis Vuitton announced today that it would be scrapping its US$16.2 billion acquisition of U.S. jewellery brand Tiffany & Co.
  • LVMH cited possible U.S. tariffs on French products as the reason for pulling out of the deal.
  • Meanwhile, Tiffany & Co. has filed a lawsuit.

After announcing its record-breaking deal to acquire U.S. jewelry brand Tiffany & Co. for US$16.2 billion last November, LVMH Moët Hennessy Louis Vuitton said today that it would be scrapping the acquisitions.

The Louis Vuitton owner said it would “not be able to complete” the purchase due to “a succession of events which undermine the acquisition,” per CNN. The French government reportedly asked the luxury goods conglomerate to defer the acquisition, citing the threat of possible U.S. tariffs on French goods.

In July, the Trump administration announced that it would impose 25 percent tariffs on French products—including cosmetics and handbags—as retaliation for a French tax on American technology companies, reported the The New York Times. However, the new U.S. tariff does not go into effect until January 2021.

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According to CNN, CFO Jean Jacques Guiony told reporters via phone call today, “It’s a governmental order.”

Now, Tiffany & Co. is striking back. In response, the American luxury jeweller has filed a lawsuit in Delaware, arguing that LVMH must complete the acquisition since a request from the French government has no legal grounds.

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Tiffany chairman Roger Farah said in a statement, “We regret having to take this action but LVMH has left us no choice but to commence litigation to protect our company and our shareholders.”

Outlets reported that shares in Tiffany dropped by 10 percent today, and overall shares have dropped by 9 percent this year. The luxury retail sector in particular has been hit hard by the coronavirus pandemic. LVMH’s intention to purchase Tiffany was a highly anticipated effort to expand the company, which already boasts ownership of iconic fashion houses like Dior, Fendi, and Givenchy, into the jewellery industry.

The story originally appeared on Harper’s BAZAAR US.