Chateau Latour sold: Allied-Lyons raises 86m pounds from disposal of vineyard

CHATEAU LATOUR, one of the leading Bordeaux vineyards, has been sold by Allied-Lyons for pounds 86m to Artemis, a private company controlled by Francois Pinault, the French industrialist .

The 200-acre vineyard, which produces around 300,000 bottles annually, was put up for sale last autumn and was expected by analysts to fetch more than pounds 100m.

There was disappointment in the City over the sale price. Shares in Allied, the international food and drinks group, closed 3p down at 537p having been ahead 3p before the announcement.

There was surprise at the name of the buyer, as Groupe Axa, the French insurance company and owner of Chateau Suduirant, had been tipped as one of the favourites, along with a unknown syndicate of Americans.

The disposal marks the end of a long association with Chateau Latour. Allied originally bought a 25 per cent stake in 1963 for pounds 250,000 and gained outright control in 1988 by buying a 53 per cent stake owned by Pearson for pounds 58m.

Allied then increased its holding to 93 per cent by buying shares from descendants of the families that had owned the estate for more than 300 years.

David Jarvis, chief executive of Hiram Walker, Allied's wines and spirits subsidiary, said: 'We see more productive uses for the money for shareholders. Initially it will be used to retire debt, and allows us to focus on our mainstream businesses.'

Analysts reckon that Latour currently makes a profit of about pounds 2m to pounds 3m a year, sharply down on the pounds 5m- plus it was making before the recession and the collapse of prices in the Bordeaux wine market.

Mr Jarvis said that under FRS3 accounting, there would be a goodwill write-off, leading to a pounds 21m exceptional debit. Earnings per share, however, would benefit from the subsequent reduction in interest payments.

Latour is one of five estates to carry the accolade of 'First Growth' awarded in 1855. Despite problems in the wine market over the past two years, Latour's reputation has been enhanced - in 1991 and 1992 its wines were rated the best in the region.

Besides the main Chateau Latour wine, which sells for between pounds 20 and pounds 20,000 a bottle, the estate also produces a second wine called Les Forts de Latour, which retails for between pounds 20 and pounds 50.

The disposal is another step in Allied's plans to rationalise its wine investments. In the past year, it has sold the Kendermann wine business in Germany and the Frederick Wildman wine importing company in the US. 'We do however remain committed to our substantial stake in the Californian premium wine industry,' Mr Jarvis said.

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