However, LVMH said KKR's bid was conditional on LVMH dropping its deal which was announced last month. A spokesman in France said that the company was confident the deal would go through. KKR in the UK declined to comment.
A source close to LVMH who had seen KKR's offer said: "The KKR initiative is conditional on LVMH and the vendors renouncing their contract of the first of October. But both parties have let it be known that they have no intention of doing so." No price has yet been attached to the KKR offer.
LVMH last month agreed to pay $2.47bn (pounds 1.48bn) for a 58 per cent stake in San Francisco-based DFS, one of the world's largest operators of duty- free outlets.
The possibility of a bid battle caused a sharp drop in LVMH shares in early trading yesterday though they steadied later. "If it's going to be a war it could cost a lot of money," one dealer said.
The battle for DFS has already been fraught with controversy. LVMH acquired its stake from two of the group's four controlling shareholders, Charles Feeny and Alan M Parker. But the transaction angered Robert Miller, the largest shareholder with a 38.75 per cent stake and the fourth shareholder, Anthony Pilaro. They contend that in agreeing to sell their stakes to LVMH, the other two shareholders acted contrary to a 1991 pact.
The Miller camp has asked for a mediator to arbitrate on the issue and has asked the commercial court in New York to suspend the LVMH deal until a solution can be found.
DFS has more than 180 stores and sales of $3bn. LVMH said the deal would expand its presence in the Asia Pacific region and emerging markets which it saw as key areas for growth. The deal would help the group secure distribution for its branded luggage and champagne in these increasingly affluent economies.
LVMH has said it would retain DFS's existing management and that the chain would be managed independently of its other businesses which include Moet & Chandon champagnes, Hennessey cognacs, Christian Dior perfumes and Louis Vuitton designer luggage.Reuse content