Jim Armitage: Raising a glass to the king of the deal makers

Outlook Time for a final toast to Diageo's Paul Walsh. You may not have liked his penchant for big-game hunting in Africa, or that elephant-sized £18m pay-off, but his palate for a right-priced deal was second to none. Few chief executives, bar perhaps Sir Chris Gent at Vodafone, have so framed the shape of a major British business today with clever deal making.

Key to Mr Walsh's success was that, although he built the business through acquisitions, he managed to do so while steering clear of the overpriced mega-deals punted his way by fee-hungry investment bankers in the booming noughties, most notably Allied Domecq.

Instead, he'd either team up to buy a few choice brands from the big-ego bidders, or stay out of the fray and do cleverer, cheaper deals thousands of miles away while his rivals' backs were turned.

The exception was the $8.2bn (£5.1bn) takeover of Vivendi's Captain Morgan rum drinks behemoth Seagram, but even there, in a deal that would frame the future of Diageo for decades to come, he teamed up with Pernod Ricard to lighten the financial load.

Not every deal went right in the early days at Diageo's predecessor Grand Metropolitan.

Flushed with the successful 1988 sale of InterContinental Hotels to Japanese buyers at the top of the market, he overpaid in the hostile takeover of the Häagen-Dazs ice cream owner Pillsbury.

But perhaps the experience taught him the perils of ego-driven growth first hand.

When Grand Met merged with Guinness to form Diageo, he quickly twigged that Pillsbury, his baby, had to go. The merged business was too unwieldy, sucking up too much cash. He decided: let Unilever do food, we'll take drinks. Pillsbury and Burger King were sold and he spent the rest of his career building up the most successful spirits business in the world.

Mr Walsh stepped down from the board at its annual meeting yesterday. He's been replaced by another executive with Diageo in his DNA, Ivan Menezes, who's also been with the business since its Grand Met predecessor. Mr Menezes has done a couple of canny Walsh-style off-the-radar deals in recent years and Diageo seems to have planned the succession well.

One thing, though. You could just about swallow Mr Walsh's pay. He had, after all, built a successful, transformed company during his 13 years at the top.

But Mr Menezes? It would have been more decent of him to start on a little less than a greedy £11m a year.

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