Business - Diageo to drop one of its auditors

Diageo, the food and drinks giant, has told its joint auditors that shareholders will be asked to dump one of the firms at an extraordinary general meeting next month.

PricewaterhouseCoopers and KPMG will find out in the next couple of weeks which firm is to be put forward by the Diageo board at the shareholders meeting.

The company, which was formed earlier this year from a merger of Guinness and Grand Metropolitan, will publish documents on 20 October setting out the boards views.

A spokesman for the company said the board would be taking advice from the audit committee and the finance department before making a decision.

Finance director Phil Yea told Accountancy Age in the spring that only one firm would survive the merger.

Sources close to the company said PwC stood a better chance of snatching the audit from its Big Five rival. Yea came from Guinness, which was audited by Price Waterhouse and audit committee chairman Keith Oates is also the deputy chairman of Marks & Spencer – a PwC client.

The contract is likely to be worth less than the combined fees paid by Guinness and GrandMet, #2.3m and #4.7m respectively. But the spin-off fees could be worth another #5m.

Both firms refused to comment.