(FORTUNE Magazine) – LOOK QUICKLY, and the blue-eyed, pudgy-faced Allen Sheppard, 56, boss of Britain's Grand Metropolitan, could pass for the double of a corporate symbol he recently acquired -- the cuddly Pillsbury Doughboy. Now look again. This is a man who once described his management style as ''a light grip on the throat.'' This is a man who refuses to answer questions sitting down, like a boxer who insists on standing between rounds. Speaking of boxing, this is a man who believes that ''anybody incapable of punching me in the face is probably incapable of being a group executive for Grand Met.'' It is doubtful that even his mother would call Allen Sheppard cuddly. Since he took charge just over two years ago, the feisty former financial analyst has been shuffling a sprawling portfolio of businesses faster than a blackjack dealer at one of Grand Met's London casinos. (In case you're in the market, these establishments, too, are up for grabs.) So far he has sold operations worth more than $4 billion. They range from wild cards, such as a U.S. day care chain and a pair of Pepsi bottlers, to one business considered ''core'' until last year, Inter-Continental Hotels. In turn, Sheppard has plunked down roughly twice that amount for new acquisitions. His biggest bet, the $5.7 billion Pillsbury purchase completed in January, is the largest hostile takeover ever by a British company. It takes Grand Met from the bar to the kitchen (see pictures for some of its products and services). Though it sounds paradoxical, a major aim of this frenetic dealing is to erase Grand Met's image as a conglomerate, never quite sure where it will make its next deal. Says Sheppard: ''Ten years ago, if anybody had asked what Grand Met's strategy was, the answer would have been, well, to be successful. That was a perfectly acceptable definition in the 1970s, but it's wrong in the 1980s. And in the 1990s, it would be a disaster.'' These days, the stock market punishes conglomerates by undervaluing their shares. And out in the real market, accelerating global competition is making concentration of management and investment resources critical. Sheppard's solution is to make Grand Met ''a powerful global player'' in three sectors it knows well: alcoholic beverages, food, and restaurants. In such slow-growth consumer businesses, profitability increasingly hinges on the worldwide reach of powerful brands. They demand heavy investments in research and advertising. They are expensive to maintain and even more costly to create. Only giant companies with the financial muscle to back up their marketing know-how can win. The same consolidation is occurring in hotels -- the business Grand Met started in 32 years ago. But to Sheppard the rewards of going global in that game looked unappealing. ''We couldn't afford to stay in both food and hotels,'' he says. ''Hotels selected itself as the one to shed because the price we could get for that business was attractive to us, while the price we had to pay to expand it wasn't.'' While food companies, such as Kraft and Pillsbury, have been selling for a range of 20 to 30 times earnings, Japan's Seibu/Saison Group last fall paid Grand Met 52 times the previous year's earnings for Inter-Continental. Grand Met's grand strategy has been working. After hitting a plateau in the mid-1980s, earnings per share have climbed 50% under Sheppard, on a sales rise of only 14%. Gone are the takeover rumors that swirled two years ago, when Grand Met appeared to be just another conglomerated dinosaur, lost and lumbering toward the tar pits. IN DRINKS, the purchase of Heublein from RJR Nabisco in March 1987 made Grand Met world champ of the alcoholic beverage business. Last year it sold 90 million cases of wines and spirits -- J&B Scotch, Smirnoff vodka, Gilbey's gin, and Almaden wines, among others -- 12 million more than No. 2 Seagram. Noting the consolidation under way in the industry, George Bull, 52, Grand Met's group executive in charge of drinks, maintains: ''If we hadn't bought Heublein, we might still be here today. But we'd be gone tomorrow.'' In the restaurant, fast food, and retail businesses, an ungainly category that still carries more than a whiff of unfocused conglomeration, the company is either No. 1 or a strong No. 2 in most of its scattered enterprises -- betting shops, liquor stores, pubs, and family-style restaurants in Britain; Burger King and the Pearle chain of optical outlets in the U.S. Finally, after swallowing Pillsbury, Grand Met is no longer merely a big operator in the British dairy business. With $5.4 billion in sales, it is the eighth-largest international food processor -- just ahead of ketchup king H.J. Heinz, though well behind the industry leaders Nestle, Philip Morris (new owner of Kraft), and Unilever. Grand Met must quickly restore some punch to Pillsbury's profits. The Minneapolis company has suffered from sloppy marketing, sluggish cost cutting, and constant management turnover. Pretax margins in its basic food business have fallen to 6% -- well below the industry average of 9% and less than half that of top performers such as Kellogg, Heinz, and Gerber. While attempting to avoid Grand Met's clutches last fall, Pillsbury made advances to 15 alternative suitors. Some were even foreigners, who, like Grand Met, enjoy important accounting and tax advantages unavailable to domestic acquirers. But because of Pillsbury's manifold problems, exemplified above all by a steady slide in earnings at Burger King -- a business few food processors feel they understand -- no one was willing to match Grand Met's initial offer of $60 a share. Says John Wakely, a food analyst with Paine Webber in London: ''This acquisition was not only expensive. It increases the risk of earnings disappointments.'' Still, despite its recent woes, Pillsbury's important assets -- brands like Green Giant vegetables, Pillsbury refrigerated dough and cake mixes, Totino's pizza, and Haagen-Dazs ice cream -- have lost little of their value. Fully 86% of Pillsbury's sales, by volume, come from products with either a No. 1 or a No. 2 market share. ''Even Burger King is still a gigantic name,'' says Stephen Carnes, food analyst with Piper Jaffray Hopwood, a Minneapolis-based stock brokerage. ''With a little tender loving care, most of these brands could quickly regain their luster.'' (For more on Burger King, see box on page 68.) Grand Met's managerial strengths dovetail nicely with Pillsbury's current weaknesses. The Doughboys, for example, are near the bottom of the U.S. food barrel in such productivity measures as sales per employee -- a clear sign of excess overhead. At Grand Met fear of overhead was a guiding principle of the late Sir Maxwell Joseph, who founded the company and ran it until 1982. Says Sheppard: ''With Max, if we had six people in a room, he'd panic and think we were developing a bureaucracy.'' Like Joseph, Sheppard hails from that classic breeding ground of British . entrepreneurs, London's working-class East End. But unlike his self-made predecessor, he earned a degree from the London School of Economics and spent 18 years climbing through the ranks at Ford of Europe and British Leyland before joining Grand Met in 1975. Thus Sheppard has attempted to preserve Grand Met's informal, entrepreneurial culture while grafting on tight financial controls.

So far that blend has allowed him to continue running Grand Met from a modest eight-story building on London's Hanover Square with a staff there and in New Jersey of just 160. Pillsbury, with half Grand Met's revenues, employs 350 corporate staff. Expect many of them to go. When Ian Martin, 53, the tough Scotsman who has moved to Minneapolis as Pillsbury's chairman, crossed the Atlantic in 1987 to run Grand Met's U.S. operations, he cut its New Jersey headquarters staff by almost half. Says Martin: ''The primacy of the line manager is one of our most fundamental beliefs.'' Speed may be the most crucial management tenet that Grand Met cherishes -- and that Pillsbury apparently forgot. ''Pillsbury had gotten to where it needed five consultants' reports just to figure out what happened last week,'' says analyst Stephen Carnes. ''Grand Met's managers impress me as forward- looking and decisive.'' Back in 1987, hearing that RJR Nabisco was considering selling Heublein, Sheppard cut a $1.3 billion deal in four days. ''Operating within a strategy doesn't preclude being opportunistic and light-footed,'' says Sheppard. The price he paid -- roughly 11 times earnings -- turns out to be a steal. Seagram recently paid about 38 times earnings for French cognac maker Martell. As a marketer, Grand Met has shown a considerable knack for anticipating changes in consumer tastes in its liquor and beer businesses. No new branded spirit in recent years has been more successful than Bailey's Irish Cream, introduced by Grand Met a decade ago and now the world's No. 1 liqueur. Grand Met has also positioned itself well to exploit an epochal shift in the British way of beer drinking -- the switch from bitters to lagers. At a 7% annual pace, lager sales are growing three times faster than the overall market. As the local licensee of brands such as Carlsburg and Budweiser, Grand Met now devotes 55% of its brewery production to these and other lagers. During the 1970s Pillsbury, too, was ahead of its competition in devising products for what proved to be the microwave boom. But in recent years it allowed that leadership position to slip. Its share of the microwave popcorn market, for example, has fallen from first to fifth. Pillsbury has also been slow to push expansion abroad. Both these areas offer Grand Met potentially lucrative opportunities. But Ian Martin resists waxing eloquent about untapped markets. In Pillsbury's food business his first priority is to control costs, which run one to two points as a percent of sales above the industry average. Says he: ''The three basics are cut costs, build brands, and develop new products -- in that order. That sounds like a cliche, like Onward Christian Soldiers, but it's true.'' According to the current timetable, after two years of this back-to-basics treatment, maybe less, Pillsbury should be profitable enough to pay for another major food acquisition. In the interim, should some smaller ''gap- filling'' opportunity surface, Grand Met's cash-rich liquor and gambling businesses can help provide the capital. One likely seller is leveraged buyout king Kohlberg Kravis Roberts. Its debt-financed takeover of RJR Nabisco has left that company with a cash flow just 1.5 times its interest costs. Grand Met, too, borrowed heavily to buy Pillsbury, but its interest cover is at least twice that high. ''We're very interested in taking a look at some of Nabisco's European operations,'' says Martin. Failure is not an option Grand Met's executives spend much time contemplating. ''We've got the management approach that's required for the 1990s,'' says Clive Strowger, 47, Grand Met's chief financial officer. ''Unilever is tired.'' Strowger also believes that ''practically every'' U.S. food company operates with an ''overstaffed, monolithic headquarters.'' That kind of cockiness leads one executive refugee from Grand Met's former subsidiary Inter-Continental to remark: ''These guys may be very bright, but they're the most arrogant bunch of bastards I've ever met.'' That's a judgment their new U.S. competitors can now examine up close.

CHART: NOT AVAILABLE CREDIT: NO CREDIT CAPTION: PILLSBURY FILLS GRAND MET'S PIE