Diageo, the company formed by the merger of Guinness and Grand Met, has been given a long-term buy rating by Merrill Lynch. The broker announced that it was upgrading its estimates and share price objective for the company whose brands include Haagen Daz, Burger King and Moet and Chandon champagne as well as the famous black stuff.

The upgrades reflect the likelihood of additional cost savings being announced in September.

Merrill Lynch also notes that the integration of the two companies has gone more smoothly than most people had hoped, while management has coped well with the downturn in Asia.

Merrill has set a one-year share price target of 850p which discounts future share buybacks and £55 million of additional cost savings by June 2001.