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
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
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

Ashdown Group: Treasury Assistant - Accounts Assistant - London, Old Street

£24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...

Ashdown Group: Business Analyst - Financial Services - City, London

£50000 - £55000 per annum: Ashdown Group: Business Analyst - Financial Service...

SThree: Trainee Recruitment Consultant

£18000 - £23000 per annum + OTE £45K: SThree: At SThree, we like to be differe...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is the o...

Day In a Page

Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

How a costume drama became a Sunday night staple
Miliband promises no stamp duty for first-time buyers as he pushes Tories on housing

Miliband promises no stamp duty for first-time buyers

Labour leader pushes Tories on housing
Aviation history is littered with grand failures - from the the Bristol Brabazon to Concorde - but what went wrong with the SuperJumbo?

Aviation history is littered with grand failures

But what went wrong with the SuperJumbo?
Fear of Putin, Islamists and immigration is giving rise to a new generation of Soviet-style 'iron curtains' right across Europe

Fortress Europe?

Fear of Putin, Islamists and immigration is giving rise to a new generation of 'iron curtains'
Never mind what you're wearing, it's what you're reclining on

Never mind what you're wearing

It's what you're reclining on that matters
General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband

Chuka Umunna: A virus of racism runs through Ukip

The shadow business secretary on the benefits of immigration, humility – and his leader Ed Miliband
Yemen crisis: This exotic war will soon become Europe's problem

Yemen's exotic war will soon affect Europe

Terrorism and boatloads of desperate migrants will be the outcome of the Saudi air campaign, says Patrick Cockburn
Marginal Streets project aims to document voters in the run-up to the General Election

Marginal Streets project documents voters

Independent photographers Joseph Fox and Orlando Gili are uploading two portraits of constituents to their website for each day of the campaign
Game of Thrones: Visit the real-life kingdom of Westeros to see where violent history ends and telly tourism begins

The real-life kingdom of Westeros

Is there something a little uncomfortable about Game of Thrones shooting in Northern Ireland?
How to survive a social-media mauling, by the tough women of Twitter

How to survive a Twitter mauling

Mary Beard, Caroline Criado-Perez, Louise Mensch, Bunny La Roche and Courtney Barrasford reveal how to trounce the trolls
Gallipoli centenary: At dawn, the young remember the young who perished in one of the First World War's bloodiest battles

At dawn, the young remember the young

A century ago, soldiers of the Empire – many no more than boys – spilt on to Gallipoli’s beaches. On this 100th Anzac Day, there are personal, poetic tributes to their sacrifice
Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves

Follow the money as never before

Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves, reports Rupert Cornwell
Samuel West interview: The actor and director on austerity, unionisation, and not mentioning his famous parents

Samuel West interview

The actor and director on austerity, unionisation, and not mentioning his famous parents
General Election 2015: Imagine if the leading political parties were fashion labels

Imagine if the leading political parties were fashion labels

Fashion editor, Alexander Fury, on what the leaders' appearances tell us about them
Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

The architect of the HeForShe movement and head of UN Women on the world's failure to combat domestic violence