LVMH makes proposal on Guinness-GrandMet merger
Jul. 16, 1997
LONDON (AP) _ LVMH Moet Hennessy Louis Vuitton on Wednesday made a new proposal to be included in the proposed merger of Guinness PLC and Grand Metropolitan PLC. The two companies said they would study it.
The proposal by LVMH, the luxury goods company, would create the world's leading drinks group.
LVMH offered to exchange its 66 percent shareholding in Moet Hennessy, its 6.4 percent stake in GrandMet and 14.2 percent in Guinness for a 35 percent stake in a new drinks company, which would also include the brands of GrandMet's International Distillers and Vintners subsidiary.
The new company would have had combined sales of 7.4 billion pounds ($12.4 billion) for 1995/96, LVMH said in a statement released from its Paris headquarters.
Guinness and GrandMet, which disclosed earlier in the day that LVMH had made a new proposal, were noncommital.
``It is too early to establish whether any agreement can be reached,'' the two companies said in a joint statement.
Guinness is one of the world's leading alcoholic beverage conglomerates, and Grand Met is a food, liquor, and retailing giant.
The companies, both based in London, agreed on a merger in May, after rejecting LVMH's earlier offer for a three-way deal which would have created a new drinks company.
LVMH set up a broad liquor distribution partnership with Guinness in 1994. The deal allows either party to get out under favorable terms if the other is acquired.
Guinness owns 34 percent of the Moet champagne business.
LVMH has said the proposed merger between Guinness and GrandMet _ creating a $34 billion group called GMG Brands _ constitutes a change in corporate control.
Guinness and GrandMet said in their statement that ``there were elements of the new outline proposals which wouldn't be in the best interests of GrandMet's and Guinness' shareholders in the form proposed.'' But they added that they ``will assess in full the commercial and financial logic of this new proposal when it is detailed in writing.''
LVMH brands include Dom Perignon, Moet and Chandon, Veuve Clicquot and Pommery champagnes; Louis Vuitton luggage; and Christian Dior, Givenchy, Kenzo and Guerlain perfumes.