LVMH's $16.2 Billion Tiffany Deal Is Off

French luxury conglomerate LVMH announced Wednesday that it would not “be able to complete” its planned acquisition of iconic jewelry label Tiffany & Co. due to the threat of US tariffs on French products, CNN Business reported. The $16.2 billion deal, first announced in November, would have made history as the biggest-ever luxury goods deal.

According to LVMH, a French conglomerate of luxury brands including Louis Vuitton, Fendi and Givenchy, among others, the deal fell through as the result of “a succession of events which undermine the acquisition.”

Among those events is the United States’ threat to impose tariffs of 25 percent on French products as part of a dispute over taxing digital companies. The US announced the planned tariffs back in July, but delayed collection until January 2021. LVMH said in a statement that it had received a letter from the French government calling on the luxury conglomerate to delay the Tiffany acquisition as a result.

In response, Tiffany has filed a lawsuit, claiming the request from the French government holds no legal weight.

“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,” Tiffany Chairman Roger Farah said in a statement.

The dissolution of the record-setting luxury deal follows months of speculation that LVMH was looking to renegotiate or back out of the agreement due to the luxury sales crash amid the financial turmoil of the coronavirus pandemic. Back in June, LVMH announced it was meeting to review the Tiffany deal in light of the “development of the pandemic,” sparking conjecture that the agreement could fall through.