By  on May 17, 2007

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. (For more on Carrefour, see page 10.)

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.

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