Drinks giants plot Allied swoop

Lucinda Kemeny|Mail13 April 2012

THREE of the most formidable players in the global drinks industry have held talks over a rival takeover bid for Allied Domecq, Financial Mail on Sunday has established.

Constellation Brands, owner of Stowells wine and Diamond White cider, has spoken with Diageo, the world's largest drinks company, and Brown Foreman, the giant US wines and spirits firm, about mounting a joint offer.

The revelation that the drinks giants have talked about a carve-up of Allied comes only days after the group, the world's number two, said it had agreed to a takeover by Pernod Ricard of France at 670p a share, valuing the FTSE 100 company at about £7.4bn.

Though no agreement has been struck with Diageo or Brown Foreman, Constellation has been using investment banks NM Rothschild in London and Merrill Lynch in the US to advise it on a deal and insiders insist the company is serious.

Attention has focused on how Pernod, which is working with American consumer products group Fortune Brands, will dismember Allied whose brands include Beefeater gin and Stolichnaya vodka, and sell unwanted businesses such as Dunkin' Brands, the owner of Dunkin' Donuts, and ice cream franchise Baskin Robbins.

Meanwhile, Constellation's advisers have been working on an alternative offer. Japanese beverages firm Suntory, together with French luxury goods firm LVMH, are also believed to be looking for a way into the deal.

Industry sources said that a rival consortium would be welcomed by Allied and that it would not necessarily have to dramatically improve on Pernod's offer as the French bid comprises 80% cash and the rest in Pernod shares. 'They could just replace the paper with cash,' said a source.

Insiders added that any rival bid would not need to be rushed as it could be weeks before Pernod's offer document is sent to shareholders and under the Takeover Code, a rival would have a further 42 days to express an interest.

Allied boss Philip Bowman has been careful not to sign an exclusivity agreement with Pernod for exactly this reason.

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