Arnault heading for GMG board

Bernard Arnault, chairman of LVMH, could secure a seat on the new GMG Brands board as part of a peace deal to settle his row with Guinness and Grand Metropolitan that is souring their merger plans. His Moet Hennessy drinks business could also be folded into the UDV spirits giant to be formed by the merger, writes Ian Griffiths.

The meeting this week was called for by Guinness chairman Tony Greener when the merger was announced last month in order to thrash out differences with Mr Arnault, who has made his opposition to the deal known from the outset.

Both sides now appear to be prepared to compromise in order to allow the merger to proceed unhindered by a dispute that has provided a high profile distraction.

Apart from the dispute being taken to arbitration, Mr Arnault has also accumulated a 6.4 per cent stake in Grand Met to add to the 14 per cent he owns in Guinness.

Although Mr Arnault could be offered the opportunity to sell his stake in Moet Hennessy to GMG Brands, he has made it clear throughout that he would prefer participation in the merged company.

The GMG camp does not regard the dispute with Mr Arnault as a deal breaker. It is clear Guinness and Grand Met would prefer to work with Mr Arnault than against him - the Moet Hennessy brands are regarded as a crucial element of the merger.

Mr Arnault has a seat on the Guinness board, but he was not initially offered a seat on the GMG Brands board. The promise of a directorship along with arrangements to ensure Moet Hennessy full participation in the enlarged UDV spirits business are thought to be sufficient to win Mr Arnault's support for the proposed merger.