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Arnault Leads LVMH on Acquisition Spree

Bernard Arnault is in a spending mood — but not for fashion.

PARIS — Bernard Arnault is in a spending mood — but not for fashion.

On Wednesday, LVMH Moët Hennessy Louis Vuitton said it had acquired a majority stake in Wen Jun Distillery, a Chinese maker of premium white spirits, for an undisclosed sum.

The acquisition comes on the heels of Arnault-led investments in a Chinese shoe retailer, an Indian leather goods maker and the hypermarket operator Carrefour — suggesting the business titan is now placing his bets on emerging markets and real estate, rather than reinventing more luxury brands.

Reports also surfaced Wednesday that Arnault and Belgian financier Albert Frère are among members of a consortium eyeing the Italian-owned real estate firm Cogedim, which specializes in upmarket commercial and residential properties. An Arnault spokesman had no comment.

Last year, Arnault and Frère teamed up to acquire mainly European companies via a new fund of 1 billion euros, or $1.35 billion at current exchange, but they have yet to announce their first transaction.

Arnault created the joint fund with his Groupe Arnault family holding, the one poised to jointly invest 22 million euros, or $29.8 million, in Belle International Holdings Ltd., a giant Chinese shoe retailer. Meanwhile, LVMH recently acknowledged it’s looking to acquire a 20 percent stake in Hidesign, a leather goods maker in India.

The acquisition of a 55 percent stake in Wen Jun, along with plans to develop a portfolio of premium products based on its heritage, suggests Arnault is keen to advance LVMH’s leading position in China, where, he recently said, it is “head and shoulders” above the competition in several business divisions.

LVMH already boasts more than 50 percent market share in premium cognac with its Hennessy brand, which has been sold in China since 1859, and its wines and spirits division posted revenue growth of more than 40 percent last year on the mainland.

China, Russia and the U.S. are considered development priorities for LVMH’s lucrative wines and spirits division, which saw 2006 operating profits jump 11 percent to 962 million euros, or $1.3 billion, on a sales gain of 13 percent to 2.99 billion euros, or $4.04 billion.

Sales in Mainland China represent only 3 percent of the LVMH total, but growth rates there last year were close to 50 percent, the company said. At present, LVMH operates some 50 stores in China for such brands as Louis Vuitton, Christian Dior, Givenchy, Celine and Sephora.

Wen Jun, located in Qionglai in southwest China, has been making white spirits for more than 450 years. The clear, potent liquor is consumed with meals, often as an alternative to beer, and is typically consumed at family, social and business occasions.

Wen Jun’s parent company, Jiannanchun, retains a 45 percent stake in the distillery. Jiannanchun is the third-largest spirits producer in China with annual revenues of $313 million.

Meanwhile, sources close to Arnault said he is keenly interested in real estate, as he was early in his career, along with funds, such as hedge funds. Having recently opened a luxury hotel under the Cheval Blanc name at Courcheval, he is said to be mulling the possibility of opening more branches, possibly in Saint-Tropez, but a final decision has yet to be made.