Company Of The Week: Allied Domecq

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The Independent Online
THE CONTINUED twists and turns of the two-month fight to buy Allied Domecq's 3,500-pub estate dominated the market again last week. Early on it looked like it was game, set and match for Hugh Osmond. His Punch Group was the only bidder left in the ring after Whitbread was forced to withdraw from the fray as its bid was referred to the Competition Commission. With some theatrical flouncing in and out of the boardroom, Mr Osmond and Allied settled on a price of pounds 2.75bn.

By the end of the week, things were not looking so good for the young entrepreneur. On Friday, details of how Nomura International, the UK investment arm of Japan's biggest security firm, might structure a counter-attack were circulating.

Nomura, Whitbread and Alchemy Partners are said to be preparing a bid, which would see Whitbread acquire about 550 branded pubs in exchange for adding equity to the offer. Nomura's UK unit, which is led by Guy Hands, is Britain's largest pub owner. Alchemy, a private equity firm which owns the 800-pub Rhesus Group, and Nomura would sell bonds backed by about 1,500 of the Allied pubs and sell some of the group's 2,000 managed pubs. The companies declined to comment.

Nomura's task is to construct an offer superior to the pounds 2.75bn stock and cash Punch bid that is backed by Bass, the largest UK brewer, and an investor group including Texas Pacific Group, billionaire financier George Soros and Morgan Stanley Dean Witter.

Whitbread was contacted by Nomura about buying the 363 Big Steak and 188 Firkin branded pubs that Allied owns. The addition of those pubs is unlikely to cause problems with competition regulators.

Allied, which snubbed Punch's earlier offers in favour of Whitbread, is receiving pounds 175m less than Punch proposed before the brewer pulled out of the race. The price is below Whitbread's last offer of pounds 2.78bn.