TO an extent, the stock market's rapturous reception of the Guinness Grand Metropolitan merger yesterday was understandable. The new company, GMG Brands, will be a bigger spirits producer than its two nearest rivals combined. Growth in the world drinks market may be meagre, but GMG ought to grab more than its share of it.

There are two caveats. In the past five years, Guinness's shares have under performed the market by 50 per cent, and GrandMet's by 40 per cent. Both have a history of destroying value through injudicious acquisitions, such as Guinness's purchase of the Spanish brewer Cruzcampo. Is this a recipe for merger?

In addition, most successful companies in recent years have aimed to simplify and specialise. Guinness already has two unrelated businesses, beer and spirits. Grand Met has three: drinks, food processing and restaurants. The new GMG will take in brewing in Dublin, fast food in Florida and dough making in Minneapolis. Is this a focused business for the next millennium?

The companies might argue they had no choice. The world spirits industry has been under acute pressure in recent years. Mr Tony Greener, Guinness's chairman, said yesterday he expected consumption to recover, but only by 1.5 per cent a year until 2000. Combine that with price increases of little over 1 per cent last year, and the case for industry consolidation is clear.

But most of the candidates are bundled together with other businesses: Seagram with fruit juice and film studios, LVMH with luggage, Allied Domecq with pubs. Putting Guinness and GrandMet together in a quasi conglomerate may be simply pragmatic.

Food, beer and restaurants - all of which have faster growth than spirits will improve the performance overall. This seems a little troubling. Today's capital markets are perfectly capable of valuing low growth and high growth companies separately.

Then there is the question of focus. In a group which runs Haagen Dazs ice cream parlours in California and distilleries in Scotland, the burden of proof is on the corporate centre to show it can add value to those activities rather than subtract it.

There is an unsettling parallel here with Pepsico of the US, which is in drinks snacks and fast food restaurants. In recent months the group has concluded that its range of businesses is distractingly wide, and is looking at demerger.

That apart, what of the cultures of the two companies? Historically, at least, they are very different. Guinness has for many years been a highly focused company. Back in the 1960s it was involved in such oddities as making plastics and spiral staircases. For over a decade, however, it has done nothing but make and sell beer and spirits.

GrandMet, on the other hand, was historically the product of pure opportunism. It moved from its beginnings in property and hotels into, for example, brewing, betting, wines and spirits, food manufacture and contact lens retailing.

"Guinness's logic is to stick to its knitting, and that's exactly what GrandMet does", Mr Bull said. "History is bunk in this context."

In addition, Mr Greener and he have known each other personally for 17 years. "What makes for a successful merger," Mr Bull said at a press conference yesterday, "is a committed and coherent management team."

BUT while not unimportant, this is not the main issue. Knitting together the spirits empire should in principle be straightforward, even if 2,000 redundancies and a cash cost of £300 million sound rather daunting.

The real problem will come in assembling a group which, pace Mr Bull and Mr Greener, will be in effect a worldwide conglomerate. Previous experience suggests that a merger of equals is a prolonged and exhausting process. If that is true within one industry, such as drinks or pharmaceuticals, it is truer across several.

For the merger to work both corporate cultures will have to change, this may necessitate the getting rid of the old guard, including at the top of the company.