LVMH sells half its stake in Diageo for £736m

LVMH, the luxury goods company that owns Moët & Chandon champagne and the Christian Dior fashion line, yesterday more than halved its stake in Diageo, the Guinness to Pillsbury dough group, netting £730m in one of the biggest UK placements in recent years.

The Paris-based firm cut its holdings in Diageo, which date back to the UK group's formation two-and-a-half years ago, from 6.8 per cent to 2.93 per cent by placing 134 million shares at 549p. In a so-called bought deal, Goldman Sachs bought the stock from LVMH for 545p and placed the shares with institutional investors, making a profit of £5.4m. Diageo closed down 31.75p at 552p on the news.

One luxury goods analyst said: "It was inevitable that LVMH was going to sell its stake.... It has talked about making further acquisitions and about the possibility of forming joint ventures or partnerships with designers." A spokesman for LVMH said the disposal had been made "for a capital gain" and "with no specific reason" in mind.

A drinks sector analyst said: "I think this is very good news for Diageo going forward. For the first time in two years, it won't be overshadowed by the fact that LVMH could sell at any time." It had offloaded a 4 per cent share of Diageo last year.