Diageo and LVMH “not realising potential assets”

LVMH would do well out of selling Diageo the remaining shares in Moët Hennessy thinks Berenberg Bank.

According to the Financial Times, analysts at the bank have worked out that LVMH could sell the majority of the remaining shares to Diageo and still retain a healthy associate income, making the deal more mutually beneficial.

A sale of more Moët Hennessy shares would apparently “free up working capital and gain the balance sheet strength needed to make strategic acquisitions”.

LVMH’s current 66% share has been valued at £12.3 billion, which would rise to £15bn if the holding was sold outright.

Diageo has often expressed an interest in buying any more Moët Hennessy shares that appear but Bernard Arnault, LVMH’s chairman, has always been reluctant to sell.

This, said Berenberg, means that neither company, “is realising the potential of each other’s assets”.

The best solution is apparently a merger to allow scale and cost savings but also deliver a steady associate income for LVMH.