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Allied board settles on pounds 2.75bn Punch pub bid

ALLIED DOMECQ finally agreed to sell its pub estate to Punch Taverns yesterday in a pounds 2.75bn deal which brings to an end months of bad- tempered wrangling.

Allied has left the door open for the two new bidders which emerged over the weekend to table formal offers for the pubs before a circular is distributed to shareholders. However, it is considered unlikely that these financial buyers, thought to include Nomura, will be able to meet the 2 August deadline. "My guess is that this is it," an Allied spokesman said.

Philip Bowman, Allied's chief executive designate, said: The price is a good one though we would admit that the twists and turns along the way have been unusual." Hugh Osmond, chairman of Punch said he was "delighted" to have the backing of the Allied board.

The negotiations broke up at 2am yesterday morning before resuming at 8am. The contracts were finally signed at 11.30 over a glass of champagne. "The tone of the meetings was cordial and sensible. Philip and Hugh got on very well," an Allied spokesman said.

The deal will see Punch take control of 3,550 Allied pubs including the Firkin and Big Steak outlets, taking its total to 4,500.

It is also buying Allied's 50 per cent stake in First Quench, the off licence joint venture with Whitbread, and Allied's 25 per cent stake in Britannia soft drinks which controls 50 per cent of Britvic.

Allied shareholders will receive pounds 1.9bn in cash and the balance in Bass shares. Bass is buying up to 650 pubs for pounds 995m including pounds 253m in cash.

Allied's shares rose 17p to 492.5p on the deal. Allied hopes to put the Punch deal to shareholders by mid-August and complete it by September after which it will concentrate on developing its spirits business.

The Punch deal is not conditional on clearance from the regulators which sank the rival Whitbread bid.

But Bass's side deal is conditional on the Punch bid being successful. Bass said the acquisition would be immediately earnings enhancing.