Extra pounds 400m from Guinness-GrandMet

Guinness and Grand Metropolitan yesterday raised the proposed special payment to shareholders from 60p to 70p a share if they approve the merger at extraordinary general meetings to be held on 26 November. The extra payment confirmed in circulars to shareholders will increase the total value of the cash rebate from pounds 2.4bn to pounds 2.8bn.

Shareholders in both companies will receive next February 864 Diageo shares and 136 B shares, with a cash value of 70p each for every 1,000 shares they now hold in either company. The B shares can be cashed in free of charges and counted as a capital gain.

Alternatively, shareholders can elect to keep the B shares, which will earn a variable dividend based on 75 per cent of the current three month LIBOR rate in the London money markets, but as soon as 75 per cent of the issue has been cashed, Diageo will have the right to convert all remaining B shares to ordinary shares at the equivalent market value at the time.

Neither GrandMet nor Guinness will pay a final dividend, but in addition to the special bonus Diageo will pay an interim dividend of 12.5p in April 1998. This includes an interim payment of 7.2p and a one-off payment of 5.3p to reflect the change in the GrandMet year-end from 30 September and the Guinness year-end from 31 December to the new Diageo year-end on 30 June.

Diageo will then pay a final dividend next November which is expected to be not less than 10.8p. Payments have been calculated so that no shareholder is worse off although GrandMet shareholders may be marginally better off, advisers said yesterday.

The agreement last month to dispose of various brands including Dewar's whisky in Europe in order to win approval for the merger from the European Commission, will not have any material impact on profits, Tony Greener, the Guinness chairman, told shareholders yesterday.

The two companies are also expected to sacrifice Dewar's, one of the biggest selling whisky brands in the US in order to win clearance from the FTC in the US. This decision may not be known until the shareholder meetings have been held. Any additional disposals the US authorities may require will not, however, reduce pro forma profits by more than 5 per cent.

Subject to shareholder approval the merger will take effect and dealings in Diageo shares will start on 17 December 17. GrandMet shares rose 6.5p to 544.5p yesterday and Guinness gained 14.5p to 547.5p.

Start your day with The Independent, sign up for daily news emails
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: Sales Assistant / Buyer

£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

Recruitment Genius: Compliance Manager

£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

Day In a Page

Greece says 'No': A night of huge celebrations in Athens as voters decisively back Tsipras and his anti-austerity stance in historic referendum

Greece referendum

Greeks say 'No' to austerity and plunge Europe into crisis
Ten years after the 7/7 terror attacks, is Britain an altered state?

7/7 bombings anniversary

Ten years after the terror attacks, is Britain an altered state?
Beautiful evening dresses are some of the loveliest Donatella has created

Versace haute couture review

Beautiful evening dresses are some of the loveliest Donatella has ever created
No hope and no jobs, so Gaza's young risk their lives, climb the fence and run for it

No hope and no jobs in Gaza

So the young risk their lives and run for it
Fashion apps: Retailers roll together shopping and social networking for mobile customers

Fashion apps

Retailers roll together shopping and social networking for mobile customers
The Greek referendum exposes a gaping hole at the heart of the European Union – its distinct lack of any genuine popular legitimacy

Gaping hole at the heart of the European Union

Treatment of Greece has shown up a lack of genuine legitimacy
Number of young homeless in Britain 'more than three times the official figures'

'Everything changed when I went to the hostel'

Number of young homeless people in Britain is 'more than three times the official figures'
Compton Cricket Club

Compton Cricket Club

Portraits of LA cricketers from notorious suburb to be displayed in London
London now the global money-laundering centre for the drug trade, says crime expert

Wlecome to London, drug money-laundering centre for the world

'Mexico is its heart and London is its head'
The Buddhist temple minutes from Centre Court that helps a winner keep on winning

The Buddhist temple minutes from Centre Court

It helps a winner keep on winning
Is this the future of flying: battery-powered planes made of plastic, and without flight decks?

Is this the future of flying?

Battery-powered planes made of plastic, and without flight decks
Isis are barbarians – but the Caliphate is a dream at the heart of all Muslim traditions

Isis are barbarians

but the Caliphate is an ancient Muslim ideal
The Brink's-Mat curse strikes again: three tons of stolen gold that brought only grief

Curse of Brink's Mat strikes again

Death of John 'Goldfinger' Palmer the latest killing related to 1983 heist
Greece debt crisis: 'The ministers talk to us about miracles' – why Greeks are cynical ahead of the bailout referendum

'The ministers talk to us about miracles'

Why Greeks are cynical ahead of the bailout referendum
Call of the wild: How science is learning to decode the way animals communicate

Call of the wild

How science is learning to decode the way animals communicate