Guinness and GrandMet clear the Brussels hurdle

Guinness and Grand Metropolitan yesterday cleared one of the biggest hurdles in their bid to create the biggest drinks company in the world by agreeing to European Commission demands to dispose of two whisky brands. Andrew Yates finds that the drinks groups appear to have got off lightly.

The European Commission yesterday gave the green light to the pounds 24bn merger between Guinness and GrandMet but forced the UK drinks companies to dispose of one of their main European whisky brands.

Guinness and GrandMet, to be called GMG Brands, has agreed to EC demands to sell its Dewar's brand in Europe within 15 months to satisfy concerns that it would have a dominant position in the Spanish and Greek whisky markets.

The move has fuelled speculation that the US Federal Trade Commission (FTC), which is also investigating the deal, may also call on GMG to sell Dewar's in the US. The FTC is also likely next week to sanction the merger subject to concessions, according to industry sources.

One drinks analyst said: "It is highly unlikely that the US would refuse to sanction the deal after the EC has waived it through."

GMG has also been called on to dispose of Ainslie, one of the smaller whisky brands in its portfolio, popular in Belgium and Luxembourg, and sell some distribution interests in Ireland.

Analysts believe the European disposals will cost GMG around pounds 10m a year in profits. However if the drinks group is forced to dispose of Dewar's in the US it could hit profits by pounds 50m.

That said, GMG could raise more than pounds 500m from the sale of the Dewar's brand around the world. Allied Domecq, Highland Distilleries and Seagram, the Canadian drinks giant, are likely bidders.

GMG is thought to have had to give up more than it originally thought. The drinks group had proposed selling a collection of secondary brands including VAT69 and White Horse as well as Ainslie, according to sources close to Brussels. But the EC is believed to have demanded greater concessions after rivals lobbied for more important brands to be sold.

Dewar's is the best selling whisky in the US, ahead of GMG's other brands such as Johnnie Walker and J&B. It is also the third biggest seller in markets such as Spain and Greece. Guinness sells 2.7 million cases of Dewar's around the world.

However most analysts believe that the EC could have demanded much greater concessions. One analyst said; "GMG has been lucky to get off relatively lightly. The group must be very relieved."

Clearance from the EC comes just days after GMG patched up its differences with Bernard Arnault, the head of French luxury goods group LVMH, who had been the merger's most vociferous opponent. Mr Arnault has now agreed to back the deal and set up distribution agreements with GMG in return for pounds 250m in cash.

George Bull, chairman of GrandMet and Guinness's chairman, Tony Greener, said in a joint statement yesterday: "We are pleased that we were able to put forward proposals that met the approval of the Commission. The regulatory approval in Europe is a substantial step forward to achieve the creation of GMG Brands."

Investors reacted favourably to the news, pushing GrandMet's shares 16p higher to 625p and Guinness by 17p to 625p.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
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

Selby Jennings: Oil Operations

Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

The Jenrick Group: Night Shift Operations Manager

£43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...

SThree: Trainee Recruitment Consultant - LONDON

£20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...

Day In a Page

Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

Yazidi girls killing themselves to escape rape and imprisonment
Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

Ed Balls interview

'If I think about the deficit when I'm playing the piano, it all goes wrong'
He's behind you, dude!

US stars in UK panto

From David Hasselhoff to Jerry Hall
Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

Grace Dent's Christmas Quiz

What are you – a festive curmudgeon or top of the tree?
Nasa planning to build cloud cities in airships above Venus

Nasa planning to build cloud cities in airships above Venus

Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect
Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

Clocks, rifles, swords, frogmen’s uniforms

Surrounded by high-rise flats is a little house filled with Lebanon’s history
Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

Four months after the bombardment, Gaza’s wounds are yet to heal

Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
Gastric surgery: Is it really the answer to the UK's obesity epidemic?

Is gastric surgery really the answer to the UK's obesity epidemic?

Critics argue that it’s crazy to operate on healthy people just to stop them eating
Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

Homeless Veterans appeal: Christmas charity auction

Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
Pantomime rings the changes to welcome autistic theatre-goers

Autism-friendly theatre

Pantomime leads the pack in quest to welcome all
The week Hollywood got scared and had to grow up a bit

The week Hollywood got scared and had to grow up a bit

Sony suffered a chorus of disapproval after it withdrew 'The Interview', but it's not too late for it to take a stand, says Joan Smith
From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?

Panto dames: before and after

From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?
Thirties murder mystery novel is surprise runaway Christmas hit

Thirties murder mystery novel is surprise runaway Christmas hit

Booksellers say readers are turning away from dark modern thrillers and back to the golden age of crime writing
Anne-Marie Huby: 'Charities deserve the best,' says founder of JustGiving

Anne-Marie Huby: 'Charities deserve the best'

Ten million of us have used the JustGiving website to donate to good causes. Its co-founder says that being dynamic is as important as being kind
The botanist who hunts for giant trees at Kew Gardens

The man who hunts giants

A Kew Gardens botanist has found 25 new large tree species - and he's sure there are more out there