IRISH jobs are unlikely to be affected by the proposed merger of Guinness and Grand Metropolitan whose cost savings would be confined to its spirits and liqueurs operations.
The resulting merger would create the largest alcohol beverage company in the world and the seventh largest food and drinks company but GrandMet has said that projected job cuts of less than 2.5 per cent worldwide are envisaged in the next three years.
Mr Pat Barry, of Guinness Ireland, said the plan was for a merger in the strict sense with no one company buying into the other - the new board would comprise GrandMet and Guinness directors. Guinness shareholders would hold about 47.3 per cent of the new issue GMG Brands shares, with GrandMet shareholders holding 52.7 per cent.
"All of this is subject to approval by the regulatory authorities," he said.
He said the significance of the proposed move lay with the distilling operations of both groups - Guinness' United Distillers operations and Grand Met's International Distillers and Vintners (IDV) with resultant gains in market capitalisation and integration of business functions.
He said that the traditional brewing end of the business would be unaffected. "In terms of impact on Guinness brewing worldwide, it does not have any material impact.
"In turn, therefore, it does not have any impact on the Guinness Irish group... Our entry into the distilling end of the business has been relatively recent and that is where the substantial focus of the benefits of this come in," he said.
The two companies' courtship goes back at least a year, after a leaked report from Guinness advisers, Lazard Brothers, last July analysed the implications of a £13.2 billion sterling bid for GrandMet.
Guinness denied it was making a hostile bid but the statement, using the names Ulysses and Venus as code names for Guinness and GrandMet respectively, was so clear the London Stock Exchange would not allow the company to change its mind in the medium term.
A Grand Met spokesman said the merger was aimed at achieving further growth for two successful companies. "It is not a distress marriage," he said.
Grand Metropolitan's has about 400 employees tied up in its Irish operations, including its food division, Grand Met Finance Ireland at Dublin's IFSC centre, and its highly successful asset, R&A Baileys operation. Overseas sales of the liqueur accounts for over 1 per cent of total Irish exports.
Mr Peter O'Connor, of Baileys, said the effect on Irish jobs was unknown but the GrandMet spokesman denied that the proposed move was a downsizing exercise.
"That is not the thrust of it. The thrust of it is to make two very strong companies stronger and an element of that will be to make some cost savings."
He said the newly merged company was aiming at a reduction of 2,000 of its employees out of 85,000 worldwide through the merger, over a three year period.
"The companies recognise that there is a period of uncertainty and they will do their best to minimise that, and there is a commitment to keep employees informed," he said.
The range of drinks brands controlled by the two companies are enough to give respectability to a bar, and include ales, lagers and cider, prominent scotch brands, Jose Cuervo tequila and Smirnoff vodka.
Yesterday's jump in share prices has knock on effects for the 2,000 Guinness employees at the company's five brewing operations and on its sales and distribution teams in the Republic. They are offered shares as part of their contracts and profit share schemes, according to "a complicated formula but one which is well tried and tested. .. All of us as shareholders were quite positive about it this morning," Mr Barry said.
But the total number of shares would be a small percentage of the Irish shareholding. The 11,000 Guinness shares, held by Irish shareholders, are estimated to represent 2.5 per cent of the overall shareholding.
In Ireland the company has brewing operations at St James' Gate, Dublin; St Francis Abbey, Kilkenny; and in Waterford and Dundalk, exporting over 40 per cent of its produce.
