UK: Diageo silent on Moet Hennessy bid plan
- LVMH-Hermes tie-up sparks fresh bid rumours
- Moet sale no nearer, says source
- Group offers Diageo "one-time opportunity"
Moet Hennessy offers Diageo a "one-time opportunity"
Diageo has declined to comment on reports that it is "standing by" to make a multi-million pound bid for Moet Hennessy.
Speculation that a Diageo bid for Moet Hennessy could be imminent has been sparked by Moet's parent firm, LVMH, buildng up a 17% stake in fashion label Hermes over the weekend. Some analysts have suggested previously that LVMH might sell its Champagne, Cognac and Scotch whisky business to raise cash for acquisitions in the luxury sector.
When contacted by just-drinks today (25 October), a Diageo spokesperson declined to comment on reports that the firm was "standing by" to make a GBP10bn bid for Moet.
However, several analysts said they remained sceptical about talk of an impending deal. A source close to Diageo told just-drinks that LVMH's tie-up with Hermes has not brought a deal for Moet any nearer.
Diageo's CEO, Paul Walsh, has previously declared his interest in acquiring the 66% of Moet Hennessy that Diageo does not already own. Its 34% stake in Moet is currently the Guinness brewer's only route into fast-growing Cognac sales in Asia and also the high-margin Champagne sector.
LVMH's chairman, Bernard Arnault, is thought to have been the major sticking point to a deal for several years. The 61-year-old has had little incentive to sell up.
"Despite this weekend's developments, we do not believe an acquisition of Moet Hennessy by Diageo is imminent," said Evolution Securities analyst Simon Hales.
But, he said that a deal was likely at some stage. "A better price for Moet Hennessy could perhaps be extracted 12 months from now," he said, adding that Moet offers Diageo "a one-time opportunity" to tap into scarce Cognac and Champagne assets. The drink giant might have to pay nearer to GBP12bn for the business, according to Evolution estimates.
LVMH said at the weekend that it was not interested in taking control of Hermes, which appeared to dispel the reasoning that it might be required to sell Moet to generate cash for acquisitions. "LVMH has no intention of launching a tender offer, taking control of Hermes nor seeking board representation," said the group.
"The objective of LVMH is to be a long-term shareholder of Hermes and to contribute to the preservation of the family and French attributes which are at the heart of the global success of this iconic brand."
Another analyst, who did not wish to be named, told just-drinks late last week: "Diageo would love to do it, but LVMH isn’t going to sell. The Moet Hennessy activities are profitable and diversify LVMH’s total business."
LVMH denied that it has plans to sell Moet when asked by Reuters last week.
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