Outlook: Cost of getting Arnault on side

on the spate of takeovers, Bernard Arnault and niche publishers

We live in the real world so the sight of Grand Metropolitan and Guinness paying Bernard Arnault pounds 250m of what once upon a time would have been called "green mail" may not seem that shocking. The realist would say that given Mr Arnault's continuing ability to block the deal and generally make a nuisance of himself, pounds 250m is cheap at the price.

However, there is a more purist view that would paint Mr Arnault as just another shareholder in Guinness and Grand Met, albeit a large one. In those circumstances he should not be entitled to any more than other shareholders are getting. It could be argued, as some in the City were yesterday, that Mr Arnault is getting what the takeover code specifically forbids - favourable terms.

Guinness has no doubt been properly advised on all this and it is true that extending present distribution agreements between Guinness and Mr Arnault to the merged group will bring in extra cost savings not originally identified - equal to about pounds 27m a year year by Guinness's estimation. There is some commercial benefit.

Even so it is hard to see what else has been achieved other than bringing a generally fractious shareholder on side. Furthermore, the pounds 250m doesn't succeed in getting rid of the Arnault problem for good. He continues as a director of the merged group and his powerful pre emption clauses in the joint distribution arrangements remain untouched. GMB Brands could easily find itself replaying this episode a few years down the line.