Merger mania: Four deals worth pounds 67bn set Footsie soaring

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The Independent Online
The merger mania sweeping the stock markets reached new heights yesterday as the City salivated over four huge deals worth a total of pounds 67bn. The unprecented rash of corporate activity saw the FTSE 100 Index of leading stocks close 72.8 points higher at 5,300.1 points.

The pounds 24bn merger between drinks groups Guinness and GrandMet cleared a crucial hurdle after Bernard Arnault, the flamboyant head of the the French luxury products group LVMH, dropped his opposition to the deal.

Meanwhile the Anglo-Dutch publishing group Reed Elsevier, whose titles include Women's Own and TV Times, announced a pounds 19.4bn merger with Dutch rival Wolters Kluwer, and the roofing tiles group Redland found itself on the wrong end of a hostile pounds 1.7bn bid from French building products group Lafarge.

To cap a remarkable day, shares in the tobacco and insurance group BAT surged 10 per cent as dealers greeted the pounds 22bn merger of its financial services businesses with the Swiss conglomerate Zurich.

The deal between Mr Arnault and Guinness-GrandMet comes just days before the European Competition Commission Karel Van Miert is expected to wave the merger, through provided the combined group disposes of some spirits brands. Responsibility for vetting the other three deals will also fall to Mr Van Miert because of their sheer size. The EC automatically investigates where the combined assets of the parties exceeds 5bn ECU (pounds 3.5bn).

Mr Arnault, who has lobbied hard against the Guinness-Grand Met merger from the day one has reached agreement with the two groups whereby he will receive a pounds 250m payment and emerge as the biggest shareholder in the combined business with an 11 per cent stake.

The merger will create the largest drinks company in the world and bring together a bewildering array of brands, incorporating anything from Johnnie Walker whisky to Gordons gin.

The merger between Reed-Elsevier and Wolters Kluwer will create the world's largest scientific publishing and information group. Shares of Reed, Elsevier and Wolters Kluwer rose sharply on news of the deal as analysts said it would give the combined group a more powerful position in the market for legal books and electronic information.

The bid by Lafarge for Redland came just days after the struggling building materials group admitted it was a takeover target and would create the world's biggest aggregates and roofing tiles company.