LVMH, the French luxury goods group, denied today that it was in talks to sell off its 66 per cent stake in Moët Hennessy to Diageo, the world's biggest drinks company.

Diageo, which owns 34 per cent of Moët Hennessy, was reported today to be considering a €12 billion bid for the rest of group, which includes Moët & Chandon and Veuve Clicquot champagnes and Hennessy cognac.

Reports had suggested that Diageo's plans were at an early stage and that no approach had been made to the Louis Vuitton hand bags and Christian Dior perfumes group.

A spokesman for LVMH said: “LVMH formally denies British press reports that it is negotiating the sale of Moët Hennessy.”

Diageo, the maker of Guinness and Smirnoff vodka, declined to comment but said it had no plans to issue a formal statement.

LVMH's share price, which has dropped by about 29 per cent this year on worries that sales will fall during a recession, fell by 4 per cent to €52.56 this morning after its denial of the rumours, which sent its share price up 5 per cent yesterday.

Buying the wine and spirits division of LVMH, which also includes Chateau d'Yquem wine, would fit with the stated aim of Paul Walsh, the Diageo chief executive, to bring more premium brands into the company.

Wine and spirits are a large part of LVMH, which was built by Bernard Arnault, France's richest man, who owns 47 per cent of the company and would make another fortune if Diageo bought out the wines and spirits division.

Its other brands include Marc Jacobs and Givenchy, the fashion houses.

Its wines and spirits unit sales declined 3 per cent in 2008 to €3.126 billion, as demand fell in the United States and Japan because of market conditions.

Analysts said that, despite the denial, a deal between the two companies made sense in the longer-term.

One said: "Arnault doesn't need the money at the moment, and is unlikely to sell in the middle of a downturn. But a sale of Moët Hennessy is still likely down the line, and Diageo is the only buyer."

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