Guinness marriage won't boost sales
outlook On Raising Interest Rates, The Drinks Giants' Merger And Financing The High-Speed Rail Link
Tuesday 04 November 1997
Brussels and Mr Arnault have already been satisfied, leaving just the US Trade Commission standing in the way. So confident are directors of shifting this one too that in anticipation they've now arranged the date of the shareholders' vote (26 November) so that the whole thing can be approved by the High Court before the turn of the year. Both Guinness and GrandMet are hopeful that the price extracted by the US Trade Commission by way of divestment will not exceed 5 per cent of their combined profits, the level at which the rules would require them to go back to shareholders for fresh approvals.
While this would actually be quite a lot, it would not be a deal breaker. Actually the divestment required is likely to be a good deal lower. Since Diageo is already being asked to divest Dewar's in Europe, it would plainly be a neat solution to the problem if that were the brand chosen for cull by the US authorities too. Analysts reckon that if the brand were disposed of lock, stock and barrel, it could fetch some pounds 500m, more than enough to cover the extra capital repayment Guinness and GrandMet announced yesterday.
So a happy ending after all. But will the couple live happily ever after? This is a merger driven primarily by its potential for cost-cutting. Nearly pounds 200m annually will be cut from the cost base on the liquor side of the group, it is reckoned. More doubtful is the claim that the complementary brand portfolios and distribution networks of the two companies will succeed in greatly enhancing sales. Claims like this have been made before for drinks mergers, notably by Ernest Saunders when in short order he acquired first Bells and then Distillers. Certainly Guinness later succeeded in putting up prices by quite a lot, but it did not succeed in selling significantly more Scotch.
The same is likely to prove true of this latest act of consolidation in the drinks industry. The benefit will all be to the shareholders in terms of lower costs and higher prices. But will it enhance consumer choice, competition and job prospects? Not a chance of it.
Board creates magnetic field to achieve lift
Singer says the track was 'force-fed down people's throats'
Endangered species spotted in a creek in the Qinling mountains
Company says data is only collected under 'temporary' identities that are discarded every 15 minutes
Trend which requires crisps, a fork and a strong stomach is sweeping Mexico's streets
George Lucas criticises the major Hollywood film studios
Some experiencing postnatal depression don't realise there is a problem. What can be done?
- 1 Jack the Ripper: Scientist who claims to have identified notorious killer has 'made serious DNA error'
- 2 Banksy arrest hoax: Internet duped by fake report claiming street artist's identity has been revealed
- 3 Drink alcohol and eat meat to improve male fertility - but cut down on coffee, studies suggest
- 4 Former East 17 frontman Brian Harvey turns up at Downing Street and 'demands to speak to Prime Minister'
- 5 The inventor of the Facebook 'like' button says he never made a 'dislike' button because he feared the 'unfortunate consequences'
Ukraine crisis: Donetsk 'tactical missile' explosion at factory sends blast wave across rebel-held city
Jack the Ripper: Scientist who claims to have identified notorious killer has 'made serious DNA error'
Banksy arrest hoax: Internet duped by fake report claiming street artist's identity has been revealed
Super-sized ships arrive in Britain: How big can they get?
Former East 17 frontman Brian Harvey turns up at Downing Street and 'demands to speak to Prime Minister'
Cameron is warned 'no possibility' of UK reducing immigration and that bid to bring in quota on migrant workers would be illegal
Residents should throw a street party and mix with immigrant neighbours, councils told
Russell Brand threatened with arrest after filming outside Fox News headquarters
Amal Alamuddin calls for the return of the Elgin Marbles from Britain: 'Injustice has persisted for too long'
London bus driver 'kicks gay couple off for kissing'
Lord Freud: Tory welfare minister apologises after saying disabled people are 'not worth’ the minimum wage
iJobs Money & Business
£25 - 30k: Guru Careers: A Corporate Actions Administrator / Operations Admini...
£18 - 23k + Benefits: Guru Careers: We are seeking a Customer Service Executiv...
£60 - 65k + Benefits: Guru Careers: We are seeking a ASP.NET Web Developer / ....
£60,000 - £80,000: Saxton Leigh: Our client is an leading Asset Manager based...