The two companies have merged their distribution operations in Eldridge's home region. Allied's Carlsberg and Castlemaine lagers will appear in Eldridge pubs and Eldrige beer - notably Thomas Hardy Country and Royal Oak bitters - will have access to Allied's national network.
Allied is also paying pounds 5.8m for the assets and goodwill in Eldridge's distribution network.
The sales force will push both Eldridge beer and Allied lager. Allied lagers will have automatic entry into Eldridge's estate of 180 managed and tenanted houses. The Allied lagers will also be given an introduction to the 550 free houses that serve Eldridge beers, although they will have to compete with other lagers.
For Allied the agreement beefs up its presence in a region where it has been weak. The main benefit for Eldridge is that it will stock lagers backed by substantial marketing support.
David Thompson, an analyst with the securities house Kleinwort Benson, said the agreement would be good for Eldridge in the short term, but he worried that it might restrict avenues for expansion in the longer term. Eldridge could find it difficult to explore the free trade market.
Eldridge does not expect the deal to make much impact in the current year. Panmure Gordon, its own stockbroker, is predicting that the company will make taxable profits of pounds 1.4m for the year to 30 September. The company said the benefits from the deal would be felt next year.
Shares in Eldridge, quoted on the Unlisted Securities Market, rose 5p to 104p. Allied closed up 3p at 548p.Reuse content