LVMH , the world's largest luxury goods group, on Wednesday denied it was in talks to sell its wine and spirits unit Moet Hennessy.

LVMH formally denies British press reports that it is negotiating the sale of Moet Hennessy, a spokesman said.

The comments followed a report in the Daily Telegraph on Wednesday that Diageo Plc , the world's biggest alcoholic drinks group, was in the early stages of planning a 12 billion euros ($15.49 billion) bid for the wine and spirits arm of LVMH.

Diageo declined to comment on the report.

Bankers have been working on the plans for several weeks, although no approach has been made to LVMH and Diageo may yet decide against a bid, the newspaper said, citing unnamed executives close to the situation.

The deal, which would be one of the biggest and most high-profile of the year, would probably be all cash, supported by a potential capital raising by Diageo, the report said.

London-based Diageo is working with Goldman Sachs, while Lazard is believed to be advising LVMH, the newspaper reported.

LVMH owns some of the most famous Champagne brands, including Dom Perignon, Moet & Chandon and Krug.

Its wines and spirits units sales declined 3 percent in 2008 to 3.126 billion euros, as demand was less positive in the United States and Japan due to market conditions.

Diageo, which makes Johnnie Walker whisky, Smirnoff vodka and Guinness beer, cut its profit target in February, blaming slowing consumer demand around the world.

LVMH, which also owns Louis Vuitton, the Marc Jacobs and Celine fashion houses and the Tag Heuer watches, had 2008 sales of 17.2 billion euros.

By 0919 GMT, LVH shares were down 2.91 percent at 53.40 euros in Paris while Diageo shares were off 0.69 percent at 788 pence in London.

(Reporting by Dominique Vidalon, editing by Marcel Michelson)