French group LVMH, the world's biggest luxury-goods maker, is considering selling its large holding in some of the oldest champagne labels to UK company Diageo.
As yet no approach to LVMH has been made and Diageo may not place a bid, if it does it is likely to be for £10.6bn. The French luxury business has not decided to press ahead with the sale of its two-thirds stake in the champagne labels.
The funds generated from a sale would allow LVMH to focus on buying rival fashion brands. The group has €6bn of debt which is due to be repaid in the next five years.
Diageo, the maker of Guinness beer, Smirnoff vodka and Baileys, currently has a 34% holding in Moet Hennessy, which produces Krug, Dom Perignon, and Moet & Chandon champagne. If the deal takes place the labels would become British-owned.
It has been estimated that LVMH's wine and spirits arm is worth around €10bn.
Goldman Sachs is advising Diageo, and it is understood that LVMH are working with Lazard.
LVMH also owns Louis Vuitton, Givenchy, TAG Heuer watches, and Donna Karan. Its other subsidiaries are: fashion and leather goods; perfumes and cosmetics; watches and jewellery; and selective retailing.
LVMH, however, has strongly disagreed that a sale may occur, according to reports.
