French drinks and luxury goods maker LVMH Moet Hennessy Louis Vuitton has withdrawn its opposition to GMG Brands, the GBP24 billion (about HK$301.30 billion) merger by British groups Guinness and Grand Metropolitan (GrandMet).
LVMH chairman Bernard Arnault yesterday abandoned his previous aggressive opposition after a deal which gives LVMH a stake in the merged company, a seat on its board, a distribution contract and a GBP500 million cash and dividend payment.
Shares in both GrandMet and Guinness soared yesterday. By mid-morning, GrandMet shares were up 2 per cent at 597.5 pence while Guinness shares climbed a staggering 4 per cent to 602p.
As part of a new arrangement, LVMH will be included in the merger through the extension of its existing distribution joint venture with Guinness to include GrandMet brands.
LVMH will have a 10-11 per cent stake in GMG Brands, the merged company, but will be bound by a standstill agreement not to go any higher than 15 per cent.
Guinness will also retain its 34 per cent in Moet Hennessey, while LVMH holds the remaining 66 per cent.
'I am not in business to create conflicts, I am in business to create wealth,' Mr Arnault said.
