Tiffany sinks 11% as LVMH calls off $16-billion buyout deal amid Covid-19

French luxury goods giant LVMH abandoned its $16 billion takeover of Tiffany, a deal that has lost its gloss in the wake of the Covid-19 pandemic, setting the stage for a bitter battle as the US jeweler sued to force it through.

The French group, led by billionaire Bernard Arnault, said its board had received a letter from the French foreign ministry asking it to delay the acquisition to beyond Jan. 6, 2021, given the threat of additional US tariffs against French products.

LVMH finance chief Jean Jacques Guiony said the letter was unsolicited and came as a total surprise, angrily rejecting suggestions that his company was using it as a pretext to pull out of the takeover of Tiffany.

“The deal cannot happen. We are prohibited from closing the deal,” Guiony told reporters on a conference call. The spread of Covid-19 has hammered sales in the sector hard and raised questions about whether LVMH was overpaying.  Tiffany shares tanked as much as 11 per cent.