Diageo and LVMH in dividend dispute

5th August, 2020 by Ron Emler

The world’s biggest premium drinks company is in dispute with the world’s largest luxury goods group over a missing dividend payment.

When it released its annual results yesterday, Diageo revealed in the notes accompanying the accounts that it has begun arbitration proceedings against LVMH over non-payment of a £166 million dividend it was expecting as a 34% shareholder in the French group’s wines and spirits subsidiary Moet Hennessy (MH).

The groups have been linked since 1994 when they took a cross-holding in each other and set up various sales and distribution alliances, not least in China.

LVMH has long since divested its holding in Diageo, but the UK company has retained its stake in MH, especially as it does not have either Cognac or Champagne brands. Indeed, there has been speculation over the years that in the unlikely event that LVMH might wish to sell its drinks division, Diageo would be keen to discuss a price.

Their relationship is governed by a Partners Agreement under which Diageo believes it is due the £166m dividend for the financial year ending 31 December 2019. On July 9, LVMH paid out €2.4 billion to its shareholders, but not….

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