RBC sees Moët Hennessy spin-off as value unlock for LVMH and Diageo
Last updated: 07:30 20 Jan 2026 EST, First published: 07:29 20 Jan 2026 EST
RBC Capital has laid out a series of scenarios that could unlock value at Moët Hennessy, including a potential spin-off, as Diageo PLC (LSE:DGE) begins a strategic review under new leadership and LVMH works to turn around its underperforming Wines & Spirits unit.
In a report published on Monday, analysts led by Piral Dadhania argued that the prospect of corporate action at Moët Hennessy, jointly owned by LVMH and Diageo, is now “greater than zero”; a first in over four decades of covering the two groups.
While stressing that no formal process is underway, RBC identified three strategic options that could benefit both parties: a discounted stake sale by Diageo, a public listing of Moët Hennessy, or a decision to maintain the status quo.
Diageo holds a 34% stake in the luxury drinks group, with LVMH owning the remainder.
RBC values Moët Hennessy at an enterprise value of €15bn on 2025 estimates, down from €21bn in 2024, and sees potential upside to €20bn in a bullish margin recovery scenario. The valuation implies an EV/EBIT multiple of 13.6x and EV/sales of 2.7x.
Under one scenario, Diageo could sell its stake to LVMH, accepting a 20% contractual discount.
This would imply net proceeds of between €2.4bn and €4.0bn, reducing Diageo’s net debt to EBITDA ratio by 0.4–0.6 times. RBC noted, however, that this may prove unpalatable for investors given the depressed valuation.
Alternatively, Moët Hennessy could be listed in Paris, allowing Diageo to sell without triggering the discount clause.
The structure could preserve LVMH’s control via a dual-share class and enhance liquidity, visibility and ESG fund eligibility for the parent group. Around one-quarter of sustainable funds currently exclude alcohol holdings.
A spin-off could also lead to earnings multiple re-rating for LVMH, given the Wines & Spirits unit has steadily lost share within the group, now representing just 6% of earnings compared with 15% in 2019.
RBC has an outperform rating on both Diageo and LVMH, with 12-month price targets of £20 and €650 respectively.
