Guinness deal gets EC OK

October 15, 1997: 10:56 a.m. ET

European Commission approves $38 billion drinks merger, with conditions

NEW YORK (CNNfn) - The European Commission on Wednesday approved the $38.9 billion merger of Guinness Plc and Grand Metropolitan Plc but the two companies will have to meet some conditions first.
     Guinness and GrandMet will have to sell the brand names of two of their Scotch whiskey brands, Dewars and Ainslie, on a Europe-wide basis, the Commission said.
     The Commission explained it was concerned that the merger would hurt competition, especially in Belgium, Luxembourg, Spain and Greece unless these measures were taken.
     "Dewars is a major international brand whose divestment will address the concerns about the parties' strength in whisky markets in Greece and Spain," the EC stated.
     GrandMet and Guinness said they would comply with the changes.
     "We are pleased that we were able to put forward proposals that met the approval of the Commission," said George Bull, chairman of GrandMet and Anthony Greener, head of Guinness, in a joint statement.
     The two firms will also have to shed distribution rights for Gilbey's gin and Wyborowa vodka in Belgium and Luxembourg and Bacardi gin in Greece. They will also have to sell off some minority interests in Ireland.
     EC approval would be one of the last hurdles for the merger of the two companies, who will be renamed GMG Brands Plc.
     Not all of their obstacles have been regulatory. French drinks and luxury group LVMH had objected to the merger for months. LVMH's chairman, Bernard Arnault, is a major shareholder in both companies and originally sought an alternative plan to combine the drinks business of all three firms.
     However, LVMH and Guinness reached an agreement on Monday and Arnault was awarded a seat on the board of the new company.
     GMG Brands will be the world's largest drinks firm if the merger is completed.

-- Randy Schultz

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