Arnault ready to back outside bidder

LVMH chairman Bernard Arnault will consider supporting a bid for Guinness from a rival drinks company to thwart any attempt to undermine a 25.1 per cent blocking stake he plans to build in Grand Metropolitan.

Guinness and Grand Met, which plan to merge to create GMG brands, have threatened to change the terms of their deal to avoid putting the merger to Grand Met shareholders for their approval. This involves scrapping the current scheme of arrangement which requires 75 per cent Grand Met shareholder approval and transforming the deal into a straightforward takeover offer of Grand Met by Guinness. Guinness would only need 50.1 per cent acceptances for the deal to go ahead.

The Arnault camp believes such a proposal, which was first mooted two months ago, is impractical. However, LVMH insiders say Mr Arnault is not bereft of ideas. So far he has gently rebuffed approaches to co-operate with other drinks companies. However, if it takes a bid for Guinness to block the merger with Grand Met then Mr Arnault will consider co-operating.

However, the threat to change the deal has increased Mr Arnault's resolve to press ahead with plans to sell his Guinness shareholding and build a 25.1 per cent blocking stake in Grand Metropolitan if the two companies do not amend their merger plans to accommodate the Frenchman's ambitions.

That 25.1 per cent stake presents a significant deterrent to the threat to orchestrate a Guinness takeover of Grand Met. Mr Arnault would still be in a position to prevent the essential restructuring of Grand Met needed to implement the merger. Valuable tax breaks would be lost and Grand Met may even be forced to maintain a separate stock market listing.

Mr Arnault's preferred approach is to marshal sufficient institutional opposition to force Grand Met and Guinness to reconsider his own alternative proposals. However, he will accumulate a 25.1 per cent stake in Grand Met if needs be.

Mr Arnault signalled his frustration at the lack of progress on a negotiated settlement when he resigned from the Guinness board last week.

Under his proposal the Grand Met and Guinness drinks companies would be rolled in with LVMH's drinks business. Grand Met's Pillsbury and Burger King divisions and Guinness Brewing would all be hived off.

Last week Guinness and Grand Met rejected those proposals, saying they would be significantly worse for their shareholders.

There has been a marked deterioration in relationships between the British companies and LVMH which has prompted Mr Arnault to consider more aggressive action.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
News
Approved Food sell products past their sell-by dates at discounted prices
i100
Sport
Jonny Evans and Papiss Cisse come together
football
News
Life-changing: Simone de Beauvoir in 1947, two years before she wrote 'The Second Sex', credited as the starting point of second wave feminism
peopleHer seminal feminist polemic, The Second Sex, has been published in short-form to mark International Women's Day
News
i100
Arts and Entertainment
The beat is on: Alfred Doda, Gjevat Kelmendi and Orli Shuka in ‘Hyena’
filmReview: Hyena takes corruption and sleaziness to a truly epic level
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Evening Administrator

£8 per hour: Recruitment Genius: This Pension Specialist was established early...

Guru Careers: Executive Assistant / PA

£30 - 35k + Bonus & Benefits: Guru Careers: We are seeking an Executive Assist...

Ashdown Group: Graduate Application Support Analyst

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Reach Volunteering: External Finance Trustee Needed!

Voluntary post, reasonable expenses reimbursed: Reach Volunteering: Would you ...

Day In a Page

Homeless Veterans campaign: Donations hit record-breaking £1m target after £300,000 gift from Lloyds Bank

Homeless Veterans campaign

Donations hit record-breaking £1m target after huge gift from Lloyds Bank
Flight MH370 a year on: Lost without a trace – but the search goes on

Lost without a trace

But, a year on, the search continues for Flight MH370
Germany's spymasters left red-faced after thieves break into brand new secret service HQ and steal taps

Germany's spy HQ springs a leak

Thieves break into new €1.5bn complex... to steal taps
International Women's Day 2015: Celebrating the whirlwind wit of Simone de Beauvoir

Whirlwind wit of Simone de Beauvoir

Simone de Beauvoir's seminal feminist polemic, 'The Second Sex', has been published in short-form for International Women's Day
Mark Zuckerberg’s hiring policy might suit him – but it wouldn’t work for me

Mark Zuckerberg’s hiring policy might suit him – but it wouldn’t work for me

Why would I want to employ someone I’d be happy to have as my boss, asks Simon Kelner
Confessions of a planespotter: With three Britons under arrest in the UAE, the perils have never been more apparent

Confessions of a planespotter

With three Britons under arrest in the UAE, the perils have never been more apparent. Sam Masters explains the appeal
Russia's gulag museum 'makes no mention' of Stalin's atrocities

Russia's gulag museum

Ministry of Culture-run site 'makes no mention' of Stalin's atrocities
The big fresh food con: Alarming truth behind the chocolate muffin that won't decay

The big fresh food con

Joanna Blythman reveals the alarming truth behind the chocolate muffin that won't decay
Virginia Ironside was my landlady: What is it like to live with an agony aunt on call 24/7?

Virginia Ironside was my landlady

Tim Willis reveals what it's like to live with an agony aunt on call 24/7
Paris Fashion Week 2015: The wit and wisdom of Manish Arora's exercise in high camp

Paris Fashion Week 2015

The wit and wisdom of Manish Arora's exercise in high camp
8 best workout DVDs

8 best workout DVDs

If your 'New Year new you' regime hasn’t lasted beyond February, why not try working out from home?
Miguel Layun interview: From the Azteca to Vicarage Road with a million followers

From the Azteca to Vicarage Road with a million followers

Miguel Layun is a star in Mexico where he was criticised for leaving to join Watford. But he says he sees the bigger picture
Frank Warren column: Amir Khan ready to meet winner of Floyd Mayweather v Manny Pacquiao

Khan ready to meet winner of Mayweather v Pacquiao

The Bolton fighter is unlikely to take on Kell Brook with two superstar opponents on the horizon, says Frank Warren
War with Isis: Iraq's government fights to win back Tikrit from militants - but then what?

Baghdad fights to win back Tikrit from Isis – but then what?

Patrick Cockburn reports from Kirkuk on a conflict which sectarianism has made intractable
Living with Alzheimer's: What is it really like to be diagnosed with early-onset dementia?

What is it like to live with Alzheimer's?

Depicting early-onset Alzheimer's, the film 'Still Alice' had a profound effect on Joy Watson, who lives with the illness. She tells Kate Hilpern how she's coped with the diagnosis