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FB Roundup: LVMH, Williams Racing, Lego

Tiffany and Co sues LVMH over $16 billion takeover stall, second-generation Williams family sells Formula One team to US investors, Lego investments in e-sales and innovation pay off against coronavirus.

Tiffany and Co sues LVMH over $16 billion takeover stall

The glittering $16 billion acquisition of Tiffany and Co by the Arnault family-controlled LVMH has descended into legal acrimony in less than a year as the French luxury goods giant accuses the US jeweller of “dishonesty” in its dealings.

LVMH said in a statement this week it was “surprised” by the lawsuit filed by Tiffany and Co against the group and vowed to defend itself “vigorously”. The jewellery retailer filed the lawsuit ordering LVMH to complete the deal under the agreed terms after the group had reportedly been urged to delay the takeover by the French government following trade tensions over luxury goods between Washington and Paris.

Tiffany and Co said it was not aware of any other French company receiving such a request: “It is all the more clear that LVMH has unclean hands.”

This case of legacy luxury businesses becoming embroiled in global politics took on a coronavirus dimension when LVMH this week went onto criticise Tiffany and Co’s performance during the crisis.

“The first half results and its perspectives for 2020 are very disappointing, and significantly inferior to those of comparable brands of the LVMH Group during this period.”

Billionaire family principal Bernard Arnault (pictured), 71, chairman and chief executive, said when the takeover was announced in November last year that LVMH intended to develop Tiffany and Co “with the same dedication and commitment that we have applied to each and every one of our Maisons.”

However, the group said this week Tiffany and Co’s management had not followed an ordinary course of business, notably in distributing substantial dividends when the company was making losses. The operation and organisation of Tiffany and Co were “not substantially intact” so LVMH claimed the conditions to complete the takeover by 24 November had not been met.

Tiffany and Co reported its worldwide net sales had dropped 45% in the first quarter of 2020 and 29% to $747 million in the second quarter of 2020 due to the impacts of Covid-19. Yet the jeweller said it had already returned to profitability and expected its earnings in the fourth quarter of 2020 would beat the same period in 2019.

Second-generation Williams family sells Formula One team to US investors

The Williams family says its sale of its Formula One racing team to a US private investment firm is the end of an era but ensures the team’s survival and a road to success.

Sir Frank Williams, 78, and his daughter Claire (pictured), 44, the deputy team principal, stepped down from the British company he founded in 1977 after this month’s Italian Grand Prix. Williams Racing was a household name in the 1980s and 1990s with championship-winning drivers such as Nigel Mansell, Damon Hill and Alain Prost at its wheels. The team won nine constructors' championships and seven drivers' titles but had not won a Grand Prix since 2012 and finished in last place in the past two championships.

In April, Michael Latifi, the Iranian-Canadian founder and executive chairman of Sofina Foods, Canada's second-largest food company and father of one of the drivers, gave the team a loan secured on its cars and factory in England. It was speculated Latifi would acquire the whole team in June. However, after a review of all its options, Williams Racing announced its sale to Dorilton Capital for a reported £136 million ($179.5 million)

Williams Racing said the transaction had the unanimous support of the board, including Sir Frank, who determined the deal delivered the best outcome for the company’s shareholders and secured the long-term success of the Williams Formula 1 team.

Claire Williams said Dorilton shared the same passion and values, recognised the team’s potential while respecting the team’s legacy and would do everything to ensure it succeeded in the future.

“As a family we have always put our team first. Making the team successful again and protecting our people has been at the heart of this process from the start. This may be the end of an era for Williams as a family-owned team, but we know it is in good hands. The sale ensures the team’s survival but most importantly will provide a path to success.”

Lego investments in e-sales and innovation pay off against coronavirus

The family-owned Danish toy giant Lego has credited its long-term investments in e-commerce and new products for its increase in revenue and sales in the first half of 2020, despite the economic disruption of the coronavirus pandemic.

The Lego Group announced its revenue grew 7% to DKK 15.7 billion ($2.5 billion) in the six months to 30 June, compared with the same period in 2019. Consumer sales shot up 14% in the same half year-on-year and the brand’s global market share increased. Operating profit was DKK 3.9 billion ($621 million), an increase of 11% compared with 2019.

Niels Christiansen (pictured) served as the the non-family chief executive of the Kirk Kristiansen family-owned Lego since he transferred from the Clausen family-owned engineering giant Danfoss in 2017. Christiansen said the strong results were due to Lego’s employees in the face of Covid-19 adversity.

“During the first half, we saw the benefits of our investments in long-term growth initiatives such as e-commerce and product innovation,” he said in a statement.

“Our strong portfolio appealed to builders of all ages and our recently upgraded e-commerce platform and agile global supply chain allowed us to fulfil online demand. We also collaborated closely with our retail partners to ensure they could continue to supply their shoppers online.”

The fourth-generation group delivered double digit consumer sales growth in its major market groups including the Americas, Western Europe, Asia-Pacific and China. Operating profit growth was driven by strong sales, offset by investments in long-term growth initiatives and higher freight costs associated with shipping products following temporary, government-mandated factory closures in Mexico and China, the group said.


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