Allied shares soar on news of sell-off talks with Dalgety

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News that Allied Domecq was in talks to sell its US food ingredients business to Dalgety for pounds 200m to pounds 250m yesterday sent its shares up 13p to 587p.

The price was also helped by news that Allied is in talks with Interbrew of Belgium to sell its Dutch breweries. Analysts expect Allied Breweries Nederland, maker of Oranjeboom, to fetch pounds 50m to pounds 60m.

Dalgety, the food and agri-business group, confirmed it was 'one of a number of parties' in talks for the possible purchase of DCA Food Industries, the leading US supplier of bakery and batter mixes.

According to a report in the Wall Street Journal, Dalgety said DCA would be a good fit and it would be ready to sell another business to pay for it.

Allied has made no secret of its desire to sell its food businesses to concentrate on wines and spirits. The company's recent name change from Allied- Lyons to Allied Domecq reflects this.

Michael Jackaman, Allied's chairman, told shareholders at the annual meeting in July that the company was actively exploring the possibility of disposals in food manufacturing. Goldman Sachs has been appointed to find buyers.

Jonathon Goble, an analyst with BZW, pointed out that a total price of pounds 300m for DCA and the Dutch breweries would lead to 1p per share of earnings dilution.

He added that DCA was one of the easier parts of Allied's food businesses to sell. The businesses include Tetley tea, Lyons cakes and biscuits in Britain and Europe.

NatWest Securities estimates Allied Domecq could raise more than pounds 1bn from the sale of its food and beverage interests. It puts sales proceeds at between pounds 611m and pounds 1.04bn.

A spokesman for Allied Domecq said the sale of the Dutch breweries would have no effect on Carlsberg-Tetley, Allied's joint brewing venture in the UK.

He said that, even if sold to Interbrew, Oranjeboom would continue to be distributed in Britain by Carlsberg-Tetley.

The agreement with Interbrew should be completed by the end of the year.

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