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Luxury giant LVMH said Wednesday it was "not in a position" to go ahead with a US$16.2-billion purchase of storied US jewellers Tiffany, which responded by threatening legal action to force the deal through.

In a statement, LVMH said its board had reviewed the deal after "a succession of events which undermine the acquisition of Tiffany & Co," notably US threats to raise taxes on French products which led the group to conclude it cannot complete the acquisition.