Diageo in informal talks with LVMH for Moët Hennessy

23 April 2009

The world's largest producer and distributor of alcoholic beverages, Diageo plc, is planning to add Hennessy, Dom Pérignon, Moët & Chandon and Krug among other high street beverage brands to its already existing impressive portfolio.

Diageo hopes to acquire the remaining stock it does not own of LVMH's Moët Hennessy, in a deal  estimated at around €12 billion.

However, London-based Diageo, which holds a 34-per cent stake in Moet Hennessy, has not made an unsolicited offer, but may be interested in a deal, if approached.

While Diageo has refused to coment, the French company has denied being in talks for a stake sale. It said in a press release today that it ''officially denies reports in certain newspapers today that suggest the group is in discussions to divest Moët Hennessy, its Wines and Spirits division. LVMH confirms that no such negotiations are taking place.''

The Daily Telegraph reported that a source at LVMH told the paper that the statement referred to reports in newspapers that both the companies had officially started discussion on the sale, which was not the case since currently only informal talks are going on.

Diageo is reported to have received the green signal from its bankers and institutional investors to proceed with the talks to acquire rest of the Moet Hennessy stock. Diageo's bankers are reported to have been working out the modalities of the deal for weeks and hence the alcoholic beverage makerhas not yet made any offer.