I don’t think the OP is interested in how it will look if the employer finds out about the first university. If the grandson doesn’t mention it there is very little chance that they will find out, so there is no question of red flags or dishonesty or anything else.
All he needs to do is say that in 2020 he got a first from the University of Wherever, and leave it at that, which is what I would do, unless he has been explicitly asked to account for every year of his life, which I think is unusual?
If that is the case, and the potential employer has, indeed asked for a blow by blow account of every year, then the game is up. The grandson could come clean at this point and speak to HR, pointing out that he overcame the problems he had in his youth to go on to do very well. Or he could just give the address of the student service department, and hope that they just give the dates that he was there. Volunteering the information that he left under a cloud seems to me foolish at the application stage. If he really wanted to he could volunteer the information after accepting an offer of employment.
Why would the employers ask for this information? Is there a gap in his CV, or did he, as I have assumed, pick up his studies at university B where he left off at A? People transfer courses all the time anyway - for all sorts of reasons. Homesickness, family problems, illness for example. They take a year out for similar reasons too. Life happens whilst people are studying. I can see no reason why it matters that he started his studies at one institution and completed at another, or why it would be dishonest to keep such information to himself. I would never recommend lying on a CV or at an interview, but being selective about what he discloses seems to me to be common sense.
What does your grandson think, OP?