Greener denies boardroom row with Arnault

Tony Greener, chairman of Guinness, was yesterday attempting to play down an apparent boardroom rift with Bernard Arnault, the head of the French LVMH luxury goods group. Mr Arnault, who until recently controlled more than a fifth of Guinness's shares, voted against the proposed merger with GrandMet at last Friday's board meeting, throwing his future at the company into doubt.

"Let me assure you that there has not been any sort of row between ourselves and LVMH," Mr Greener said. "We have had a number of very commercial, professional and sensible discussions about this. Discussions between us were not at all acrimonious but it is not unknown for the French and British to disagree."

He denied the relationship with LVMH, which after selling one-third of its stake in January retains a 14.2 per cent shareholding in Guinness, was effectively dead. "Absolutely not. We have a lot of mutual interests and benefits from our joint venture," Mr Greener said.

After the merger Mr Arnault's stake in the combined Guinness/GrandMet group will fall again to between 6 and 7 per cent and analysts in Paris were speculating yesterday that he would soon move to sell his remaining holding. Mr Arnault was not in London yesterday and it is not yet known if he will attend Guinness's annual meeting on Thursday.

There has been increasing speculation since last summer that Mr Arnault is growing more and more dissatisfied with the return on his investment in Guinness, whose shares have drifted throughout most of the 1990s. The value of his stake had also been hit until recently by the fall in the value of the pound against the French franc.

There had been no acrimony, Mr Greener said, and workman-like discussions would carry on over the coming weeks. Mr Arnault had been told of the plans at the same time as other Guinness board members about two weeks ago, a fortnight after Mr Greener and GrandMet's chairman, George Bull, agreed to explore a merger.

Mr Arnault wrote to the heads of the British groups to propose combining the three spirits and wines businesses of GrandMet, Guinness and Moet Hennessy as an independent listed group. Asked if Mr Arnault would be offered a place on the board of the merged company, Mr Greener said: "That's not for me to say."

Guinness and LVMH have had a close relationship since 1988 when the two companies took a 12 per cent cross-shareholding in each other as a bulwark against hostile bids for either party and as a prelude to creating a worldwide distribution network for their products. After a string of successful ventures, the two increased their shareholdings to 24 per cent.

The cross-shareholdings were restructured in 1994 when Guinness came under fire for getting too involved with a diversified luxury products group that was looking to expand in television and fashion. Guinness swapped its stake in LVMH for a 34 per cent holding in its Moet Hennessy drinks arm. LVMH's stake in Guinness fell to 21 per cent where it remained until last January's partial sale.