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Taittinger Changes Hands -- For Now

Real-estate investment group plans to buy the Taittinger family's company, but it won't keep the famed Champagne house

Posted: July 22, 2005

Taittinger Champagne will soon have a new owner, but its long-term fate is still uncertain.

Starwood Capital Group, a real estate investment firm led by the former CEO of the the Starwood hotel corporation, agreed Friday to buy a majority stake in Groupe Taittinger SA and Société du Louvre from the Taittinger family in a deal worth $1.46 billion. But Connecticut-based Starwood Capital is more interested in the substantial hotel assets of Société du Louvre than the bubbly of Champagne's third-oldest house. It plans to sell the Champagne operation once the deal closes.

Any sale of Taittinger Champagne won't occur until the European Union approves of Starwood's deal, possibly by the end of September. "The Champagne unit is not part of the core business," said a spokesman for Starwood CEO Barry Sternlicht. "Starwood Capital intends to work very closely with the Taittinger family to ensure it finds an appropriate home once the deal is consummated."

That leaves open the possibility that some members of the Taittinger family will buy the Champagne house back. Sources in the Champagne industry have said that several of the heirs were upset with the majority's decision to sell and want to hold onto the brand.

Whether that's possible remains to be seen. Before Starwood's announcement, some companies reportedly bid on just the Champagne brand. French newspapers have reported that spirits giant Pernod Ricard, which will soon acquire both Perrier-Jouët and Mumm with its takeover of Allied Domecq, is interested in Taittinger as well.

One of the last family-owned major producers in Champagne, Taittinger began life as Forest-Forneaux in 1734. Pierre Taittinger bought it in 1931 and added several top vineyards to its holdings. It currently produces about 5 million bottles annually and owns more than 650 acres of vines.

The Taittinger family announced it would consider bids for its stake in the companies last month. Starwood will also buy the shares of Belgian financier Albert Frere and the Peugeot family. Société du Louvre's assets include 14 luxury hotels, Europe's second-largest budget hotel chain and Baccarat crystal.

Until May, Sternlicht was chairman of Starwood Hotels & Resorts Worldwide, which he built into an empire that included hotel chains Westin, Sheraton, St. Regis and "W" Hotels. He resigned to focus on his investment group, which owns more than $7 billion in real estate.

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