Allied Domecq appointment rekindles hopes of merger

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The Independent Online
ALLIED DOMECQ, the struggling spirits and pubs group, yesterday rekindled City hopes of a merger with another drinks group when it appointed a new finance director and completed a clean-up of its balance sheet.

Shares in Allied jumped 10 per cent to 520p as the company announced that Philip Bowman was taking over from Tony Trigg as finance director. Analysts said Mr Bowman, a former finance director of brewing giant Bass and chairman of Liberty, the retailer, has a reputation for coming up with value-enhancing deals.

Meanwhile, Allied announced it was planning to spend pounds 9m redeeming its preference shares, completing a process of tidying up its balance sheet in preparation for a possible demerger. Earlier this year, Allied repayed a pounds 75m debenture and redeemed a pounds 200m bond.

Sir Christopher Hogg, chairman, said the company was still interested in industry consolidation despite failing to agree a deal with Seagram, the Canadian firm. "This is a slow growth industry and consolidation is an obvious route," he said.

He added that the abolition of advance corporation tax, due next year, had removed a reason for keeping Allied's two divisions together, as the company no longer needed the UK earnings stream from its pub and retail operations to offset tax on its dividend payments.

However, analysts said hopes that a merger was back on the cards were premature. "Allied is no further forward on a merger," said one observer.

The debate overshadowed disappointing full-year results, which showed profits before exceptional items rising just 1 per cent to pounds 615m.

Investment, page 23

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