Grand Metropolitan Plc

Question: Grand Metropolitan PLC is the world's largest distributor of wine and spirits. It is mainly operated in London in the United States. In 1991, pre-tax profit increased by 8% beyond market expectations, the company's president said the company's goal is "continuous improvement". In spite of the favorable world recession in 1991, the stock price of GrandMet is 10% lower than the average P / E ratio of S & P 500 companies. More importantly, there is a rumor that GrandMet's stock market value is over $ 14 billion. This may be the target of the acquisition.

Diageo Plc was born when the two most famous breweries in 1997, Gity Plc and Grand Metropolitan Plc merged. In 2004 the company was reorganized into three different strategic business units: Diageo Europe, Diageo North America and Diageo International. In 2005, Diageo bought the oldest brewery Bushmills Distillery in Ireland. In 2006, the company expanded to Russia and acquired a majority share of the Smirnov vodka business (www.diageo.com).

Diageo was originally a global leader in brand food and beverages, founded in December 1997 by the merger of Guinness PLC, Alcohol and Grand Metropolitan plc (The Gale Group Inc, 2006). Between 2000 and 2002, Diageo's strategic decision was to withdraw from the company's food interests by selling food companies and focusing on high quality alcohol. Is the detailed history of Diageo plc before and after the founding shown in the figure? : Diageo has seven of the 20 major spirits brands in the world. Diageo's beer brand includes Guinness, which accounts for about 20% of net sales, and the only strong brand in the world. Meanwhile Diageo's wine brand accounts for approximately 5% of Diageo's net sales. This means that the efficiency of production, sales and marketing will be improved by the size of Diageo.

Diageo was created when Grand Metropolitan plc and Guiness, plc merged in 1997. Diageo's name is not well known to consumers, but its brand is the most famous brand including Guinness, Smirnoff, Johnnie Walker, Quervo. The company recently decided to concentrate on strategy through spirits, wine and beer business and to sell subsidiaries of Pillsbury and Burger King. This case study focuses on the decision of capital structure proposed by Diageo. 2) Is Diageo's current capital structure suitable for new business? I believe that it traditionally has a conservative debt policy. If so, is this policy appropriate? Is Diageo's capital structure as conservative as you think? Diaggio's capital structure is not as conservative as he thinks.