Talks are expected to continue into the weekend with observers close to the negotiations suggesting that Punch is likely to reduce its original offer from pounds 2.925m to a figure closer to pounds 2.7bn. However, it is not clear if the First Quench off-licence business, formed from the merger of Threshers and Victoria Wine, will be included. The removal of the off-licences from the deal could cut pounds 100m from the price tag.
In a last-ditch attempt to maintain some form of power in the sale negotiations, the Allied board said it would take steps to demerge the pubs division if a satisfactory deal with Punch could not be agreed.
This was laughed aside by the Punch camp. It said a demerger would take too long, would yield a lower value and leave in place a management team that has not been regarded as one of the pub estate's prime assets. "It is just an attempt at a negotiating ploy," one analyst said.
Separately, Whitbread was backtracking yesterday from remarks attributed to the head of its brewing division. Miles Templeman was quoted as saying that "the genie is now out of the bottle" regarding the demerger of Whitbread's brewing interests. Whitbread would have been obliged to sell its brewing interests if it had bought the Allied pubs as it would have exceeded its threshold under the Beer Orders. Whitbread said: "We are not going to comment on what may or may not happen. We look at our businesses all the time. It is business as usual."
Whitbread withdrew its agreed pounds 2.8bn offer on Thursday after it was referred to the Competition Commission.
Having never been granted access to the Allied books nor granted meetings with the board, the privately controlled pubs group now holds the whip hand in the negotiations. But analysts said a dramatically reduced offer would affect Punch if it should attempt a stock market flotation in the future.