Diageo braced for protests amid talk of £11bn LVMH bid

Published on Tuesday 13 October 2009 21:24

DIAGEO chief executive Paul Walsh, is bracing himself for a fresh wave of protests as workers whose jobs are threatened by a major restructuring proposal lobby shareholders at the drinks giant's AGM today.

The demonstrations come amid mounting speculation that Walsh is lining up a 12 billion (11bn) bid for the wine and spirits arm of LVMH, the French luxury goods company. Sources close to LVMH say Walsh is in talks to buy the 66 per cent stake in Mot Hennessy from joint venture partner LVMH.

The deal is likely to be contingent on LVMH finding a significant luxury goods acquisition, which is a distinct possibility in the downturn.

During the credit boom, Diageo has seen its position as one of the world's largest drinks groups threatened by European rivals, such as Pernod Ricard.

Any deal would see some of the world's oldest Champagne labels, including Mot & Chandon, Krug, and Dom Prignon, become British-owned.

Meanwhile, protestors – all member of the Unite union – will be pressing Diageo shareholders to ask questions about the restructuring plans and demand to see an alternative plan that would keep open Johnnie Walker's historic Kilmarnock site, as well as the Port Dundas distillery in Glasgow, averting the huge job losses.

Unite argues that the alternative plan is a more cost- effective way for a business of Diageo's international standing to do business.