UK drinks pair reject LVMH proposals

Grand Metropolitan and Guinness yesterday rejected the latest proposals from LVHM that were designed to overcome the French luxury goods group's opposition to the UK drinks groups' pounds 23bn merger, writes Andrew Yates.

The proposed deal involved LVHM, headed by Bernard Arnault, splitting its Moet Hennessy subsidiary into two - a champagne group and a cognac business. LVHM would have sold its 66 per cent stake in Hennessy to Guinness in exchange for its 34 per cent stake in Moet.

"We had three-way talks with Moet Hennessy's finance director yesterday about the split up of the business. We have studied these outline proposals, but they do not appear to be in our shareholders interests," a spokesman for GrandMet said.

However, LVMH claimed it was Guinness and GrandMet that had suggested the deal and that there was no question of it going ahead. Instead, LVMH was planning to outline alternative proposals as early as today for a merger of United Distillers and IDV, the drinks divisions of Guinness and GrandMet respectively, with Moet Hennessy.