The stock market had expected the drinks group to forge a link, perhaps even indulge in a merger, with another drinks operation following the creation of Diageo through the get together of Grand Metropolitan and Guinness.
Allied's shares fell 21p to 533p; at one time they were off 35p.
Since Diageo appeared there has been a succession of stories that Allied, to counter such a powerful opponent, would link with the likes of Seagram of Canada or Pernod Ricard of France.
But in a 110-page circular Allied, in effect, poured out its heart, giving a detailed financial break down which indicated it was doing well and did not need any outside help.
Even before Diageo appeared, the stock market had taken the view that Allied's best course was a straight forward demerger, leaving stand alone retail and spirit operations.
But Allied came out against a split and has appeared reluctant to change its shape although it could be a casualty of Diageo's marketing muscle.
It is thought to be keen to buy Diageo's Dewar's Scotch whisky brand which is being sold at the insistence of regulators. Diageo, however, has not won unanimous analytical acclaim, with Greig Middleton saying sell.
The rest of the stock market looked rather tired with some prepared to snatch profits generated in the recent surge. A dull New York opening and the reappearance of interest rate worries exacerbated the subdued mood.
Telecoms remained splendidly aloof. Orange led blue chips, going to yet another peak with a 16p gain to 361p and Vodafone was another in record- breaking mode with a 20p gain to 540p (after 560p). BT added 4.5p to 574p following better-than-expected figures but Cable & Wireless gave up 19p to 623p after BT's Sir Peter Bonfield said "there are no discussion with Cable at the moment". General Cable improved 7.5p to 106.5p on suggestions it could merge with Telewest Communications, up 1p at 80.5p.
Energy firmed to 775.5p. PacifiCorp, the US utility, has offered 765p but it is widely believed that Texas Utilities could mount a counter bid and, according to at least one investment house, is prepared to go to 800p.
Oils were ruffled by the Shell performance with British Petroleum off 13p at 784p and Shell 12.25p at 409.5p.
Reuters, following the Henderson Crosthwaite investment dinner, rose 11p to 590p and Rank, the leisure group, withstood hefty overseas sales at 300p to end just a shade easier at 309p. Chelsea Village fell 7p to 91.5p on the surprise departure of manager Ruud Gullit; Hay & Roberston, producing Ruud sportswear, lost 11.5p to 158.5p.
Computer shares were a little firmer after Wednesday's shake out. JBA, which started the retreat with a profit warning, recovered 175p to 807.5p helped along by Merrill Lynch support. Micro Focus rose 60p to 2,992.5p after announcing a five-for-one share split. Rebus, the computer group split from CE Heath, firmed to 104p on bid talk.
Jarvis, the construction group which has been transformed by its rail maintenance expansion, crossed 500p, closing 8p higher at 505.5p. The Government cleared its take over of the Fastline maintenance operation.
Take over bids continue to appear. Spandex, a sign distributor, surged 55p to 302.5p after disclosing possible bid talks; printer Watmoughs gained 46.5p to 320p when it said a possible counter bidder lurked. Quebecor Printing, a Canadian group, has mounted a hostile 257p a share offer. Enviromed, a troubled health care group, fell 1.5p to 8p when it emerged a possible bidder had decided not to reopen talks.
Celsis, the hygiene kits group, produced a profit warning, leaving the shares 19p off at 51.5p and becoming the latest scalp of bear raider Simon Cawkwell, aka Evil Knievel.
Tadpole Technology gained a further 4.5p to 26.5p and Queens Moat Houses, reflecting the NatWest Securities buy recommendation, improved 1.75p to 19p. Dean Corporation, a property services group, firmed to 13p, on an upbeat trading statement.
Kwik Save, the discount food retailer, shaded 4.5p to 293.5p. There is talk that Dairy Farm of Hong Kong is looking to unload its near 30 per cent interest. Somerfield, little changed at 250p, could be interested.
Waste Recycling improved 18p to 356p, a peak. Stockbroker Redmayne Bentley is upbeat, forecasting profits of pounds 5.3m for last year and pounds 9.3m this year. TLG brightened 6.5p to 98p on Wassall bid hopes.Reuse content