|
|
Tiffany & Co. to Pay $450M to Swatch Group
Dec 23, 2013 3:37 AM
By Sonya Burlan
|
|
|
RAPAPORT... Tiffany & Co. has been ordered by a Dutch court to pay $449.5 million (CHF 402.7 million) to Swatch Group over their failed joint venture. As a result of the ruling, the luxury jeweler lowered its earnings forecast by between $2.30 and $2.35 per share for the fiscal year that ends on January 31, 2014, from its previous guidance of $3.65 to $3.75.
Tiffany & Co. and Swatch established a partnership in December 2007 to produce and market watches, but the deal ended in a bitter and expensive court battle. Swatch sued Tiffany in December 2011 for breach of contract, prompting Tiffany to countersue a few months later.
The Netherlands Arbitration Institute (NAI) on Saturday ruled in favor of Swatch. In addition to the arbitration award, Tiffany & Co. must also pay approximately $800,000 to cover two-thirds of the arbitration costs and reimburse Swatch an amount of $8.8 million for legal fees and expenses incurred by the group.
Michael Kowalski, the CEO of Tiffany & Co., said that the company has the funds to pay the full amount and that the ruling will not impact the company’s existing business plans. Kowalski said Tiffany will record an after-tax charge of $295 to $305 million related to the arbitration during the ongoing fourth quarter.
“We were shocked and extremely disappointed with the decision of the majority of the arbitral panel. We firmly believe the panel’s ruling is not supported by the facts of this case or the various agreements between the Swatch parties and the Tiffany parties,” Kowalski said.
Tiffany & Co. reported in November that earnings in the first nine months of the fiscal year rose 21 percent year on year to $285 million. Tiffany's shares have increased 58 percent on the New York Stock Exchange since the beginning of 2013.
|
|
|
|
|
|
|
|
|
|
Tags:
Netherlands, Netherlands Arbitration Institute (NAI), Sonya Burlan, Swatch, Tiffany & CO.
|
|
|
|
|
|
|
|
|
|
|
|
|