Guinness Ireland's £33 million acquisition of the outstanding 70 per cent of drinks distributor United Beverages may be frustrated by the European Commission's decision that Guinness must sell some of its Irish distribution interests as one of the conditions attached to the Guinness/ Grand Met merger. Last June, Guinness announced plans to take over the 70 per cent of United Beverages owned by Fyffes, James Crean and the Byrne and Corcoran families for £33 million. Guinness already owned 30 per cent of the group, which distributes soft drinks, alcopops and a range of bottled and canned beers.

The takeover was subsequently voluntarily referred to the Competition Authority by Guinness after an earlier referral by the Department of Enterprise & Employment had taken place too late. The Competition Authority has still to decide on the Guiness/United Beverages takeover.

But last week's decision by the European Commission that Guinness should sell certain minority shareholdings in Ireland "to ensure continued competition in distribution in Ireland" has led to renewed speculation that the United Beverages takeover may yet be unravelled to comply with the conditions attached to the £24 billion sterling merger with Grand Metropolitan.

No specific disposals were mentioned by the Commission, but inevitably attention has focused on Guinness's 49.6 stake in Cantrell & Cochrane, and its 33 per cent stake in wine distributor, Edward Dillon. Ironically, had Guinness taken advantage of the administrative foul-up that led to the United Beverages takeover being referred too late to the Competition Authority, that deal might now have been completed.

Analysts in London are becoming increasingly doubtful that Allied Domecq - the majority shareholder in C&C - will exercise its option to buy out the Guinness minority stake for around £300 million. While C&C is hugely profitable, its business does not fit in with Allied Domecq's overall strategy of concentrating on its spirits business.

There is a growing feeling in London and Dublin that Allied Domecq would be happy if the Guinness stake were sold to institutional investors and C&C floated on the stock market. In this situation, analysts believe Allied Domecq might reduce its shareholding to below 50 per cent.