End to Guinness and GrandMet deadlock in sight

Signs that an end may be in sight to the deadlock surrounding the pounds 23bn merger between Guinness and Grand Metropolitan started to emerge last night, just as Bernard Arnault, the combative French head of LVMH, flew into the UK intent on scuppering the deal.

John McGrath, chief executive of GrandMet, gave the biggest hint yet that the UK drinks group would be prepared to negotiate a deal with Mr Arnault. His remarks came just 24 hours after Mr Arnault further muddied the waters by mounting a pounds 618m stock market raid on GrandMet's shares, taking his holding to 11.05 per cent, and simultaneously reducing his investment in Guinness from 14.2 to 12.46 per cent. Mr Arnault has spent more than more than pounds 1.4bn on GrandMet shares in the past month.

However, Mr McGrath remains opposed to Mr Arnault's tabled plans to form a pounds 15bn wines and spirits business, comprising Moet Hennessy, part of LVMH, the IDV business owned by GrandMet and the United distillers arm of Guinness. The two UK drinks groups are set to formally reject these plans within the next week.

GrandMet is unwilling to sell off its Burger King and Pilsbury food manufacturing operations to facilitate a three-way merger. However, GrandMet would consider alternative proposals to split Moet Hennessy into two. The merged Guinness and GrandMet, to be known as GMG Brands, would control the Hennessy cognac business and LVMH ownership of the Moet champagne operation.

"GrandMet and Guinness would not say no to the idea of acquiring the champagne business of Moet Hennessy and giving up the cognac side. We would also consider giving Mr Arnault a stake in an unquoted business within GMG Brands incorporating Moet Hennessy and our spirits business," Mr McGrath said.

"Mr Arnault's acquisition of shares in GrandMet increases his leverage and is a way of getting around the negotiating table again. It is our clear intention to find some form of settlement between the sides. We are completely open-minded to options that create value for our shareholders. But Moet Hennessy is not strategically vital to GMG and our merger can continue with out it. We are still analysing Mr Arnault's proposals carefully but it still appears they are not acceptable to us. We would not demerge any of our businesses in the foreseeable future," he added.

Mr Arnault has stepped up the pressure on GrandMet and Guinness to return to the negotiating table by arranging a series of meetings, beginning today with big shareholders in the UK companies, to outline his alternative proposals. He flew into London last night to have dinner with BZW, his advisers, ahead of the meetings.

"We are arranging some informal meetings with institutions and analysts which have expressed an interest in meeting Mr Arnault. But we are not likely to bring any new information to the table."

However GrandMet's and Guinness's institutional shareholders are unlikely to be moved by Mr Arnault's proposals unless he significantly reduces his demands to have a 35 per cent stake in the combined spirits group.

"The proposals put forward by Mr Arnault are clearly not acceptable," an institution said.

Start your day with The Independent, sign up for daily news emails
ebooksNow available in paperback
The 67P/CG comet as seen from the Philae lander
scienceThe most important scientific breakthroughs of 2014
Arts and Entertainment
Ian McKellen as Gandalf in The Hobbit: The Battle Of The Five Armies
Arts and Entertainment
Sarah Koenig, creator of popular podcast Serial, which is to be broadcast by the BBC
tvReview: The secret to the programme's success is that it allows its audience to play detective
Ruby Wax has previously written about her mental health problems in her book Sane New World
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Marketing Services Manager - (communications, testing, DM)

£32000 - £35000 per annum + benefits: Ashdown Group: Marketing Services Manage...

Guru Careers: Finance Account Manager

£Neg. (DOE) + Excellent Benefits: Guru Careers: A Finance Account Manager with...

Ashdown Group: Java Developer - Hertfordshire - £47,000 + bonus + benefits

£40000 - £470000 per annum + bonus: Ashdown Group: Java Developer / J2EE Devel...

Ashdown Group: Direct Marketing Manager - B2C, Financial Services - Slough

£45000 - £55000 per annum + Benefits: Ashdown Group: An exciting opportunity h...

Day In a Page

Homeless Veterans appeal: 'You look for someone who's an inspiration and try to be like them'

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Could cannabis oil reverse the effects of cancer?

Could cannabis oil reverse effects of cancer?

As a film following six patients receiving the controversial treatment is released, Kate Hilpern uncovers a very slippery issue
The Interview movie review: You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here

The Interview movie review

You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here
Serial mania has propelled podcasts into the cultural mainstream

How podcasts became mainstream

People have consumed gripping armchair investigation Serial with a relish typically reserved for box-set binges
Jesus Christ has become an unlikely pin-up for hipster marketing companies

Jesus Christ has become an unlikely pin-up

Kevin Lee Light, aka "Jesus", is the newest client of creative agency Mother while rival agency Anomaly has launched Sexy Jesus, depicting the Messiah in a series of Athena-style poses
Rosetta space mission voted most important scientific breakthrough of 2014

A memorable year for science – if not for mice

The most important scientific breakthroughs of 2014
Christmas cocktails to make you merry: From eggnog to Brown Betty and Rum Bumpo

Christmas cocktails to make you merry

Mulled wine is an essential seasonal treat. But now drinkers are rediscovering other traditional festive tipples. Angela Clutton raises a glass to Christmas cocktails
5 best activity trackers

Fitness technology: 5 best activity trackers

Up the ante in your regimen and change the habits of a lifetime with this wearable tech
Frank Warren column: 2014 – boxing is back and winning new fans

Frank Warren: Boxing is back and winning new fans

2014 proves it's now one of sport's biggest hitters again
Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

Jeb Bush vs Hillary Clinton

Karen Tumulty explores the power dynamics of the two first families
Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

Stockholm is rivalling Silicon Valley

The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

Crucified Santa: Urban myth refuses to die

The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

The Boy in the Dress: On set with the stars

Walliams' story about a boy who goes to school in a dress will be shown this Christmas
La Famille Bélier is being touted as this year's Amelie - so why are many in the deaf community outraged by it?

Deaf community outraged by La Famille Bélier

The new film tells the story of a deaf-mute farming family and is being touted as this year's Amelie
10 best high-end laptops

10 best high-end laptops

From lightweight and zippy devices to gaming beasts, we test the latest in top-spec portable computers