Bernard Arnault: A Spirits Race Picks Up Speed

Bernard Arnault couldn't stay out of the fray much longer. On July 21, the chief of LVMH resigned from Guinness' board in order to pursue his three-way merger proposal for LVMH, Guinness, and GrandMet. His goal: to create a wine-and-spirits giant out of GrandMet's International Distillers & Vintners, LVMH's Mot Hennessy, and Guinness' United Distillers--though Guinness and GrandMet are pursuing a merger of their companies without LVMH.

Resigning from Guinness made it easier for Arnault to sell some of his 14.2% stake. He is using the proceeds to buy more GrandMet stock, bringing LVMH's GrandMet stake to 11.05%. That gives him enough shares to demand a shareholders' meeting to consider his three-way merger proposal ahead of the meeting planned to consider the Guinness-GrandMet plan.

A Guinness spokesman says: "We are confident our shareholders will vote for our proposal." But if Arnault prevails on GrandMet, life could be difficult for Arnault's former chums at Guinness.

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