John McGrath, chief executive designate of Diageo, yesterday signalled that the new drinks group was likely to give more money back to shareholders over the next few years on top of the 70p-a-share pounds 2.8bn payout, it has already promised.
GrandMet predicted that the drinks industry would undergo a huge consolidation in the wake of its merger with Guinness. "A lot of companies are under pressure and consolidation will take place. We welcome this as we prefer to have rational competitors
GrandMet also revealed that its Burger King fast food chain is poised to step up its attack on arch-rival McDonald's. It is about to launch Big King, a giant cheese burger, and the Super Fry, a new chip that is designed to stay crispier for longer, in the UK.
Mr McGrath said: "The burger market has been relatively flat but we have continued to gain market share by introducing new products. We will not cut prices like McDonald's."
George Bull, chairman of GrandMet said he was sad to see the end of GrandMet: "This is an end of an era but we join Diageo in good shape." Analysts agreed that GrandMet has signed off on a high note, with underlying pre- tax profits coming in ahead of expectations at pounds 981m thanks to a strong performance from the IDV spirits business.
Mr McGrath said he was confident the merger with Guinness would be sanctioned by the US Federal Trade Commission within a week.
GrandMet also confirmed that Bernard Arnault, the head of French luxury goods group LVMH who had threatened to scupper the deal, had agreed to take a seat on the Diageo board as soon as the new company was formed. LVMH will own 11 per cent of Diageo. However, under a new agreement Mr Arnault cannot increase that stake above 15 per cent.
Diageo has already announced it will cut its workforce by 2,000. However analysts believe the final figure could be much higher than that.