Allied Domecq eyes Australian winery

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Allied Domecq, Britain's second-biggest drinks group, sparked speculation yesterday that it was mounting a bid for Australia's Peter Lehmann Wines after increasing its stake in the company.

Allied, whose brands include Beefeater gin and Ballentine's scotch, said it had taken its shareholding to 5.4 per cent. Industry sources said the wine company, which is based in Barossa Valley, in southern Australia, would be a good acquisition for Allied, which turned its attention to wine companies after dropping out of the bidding for Vivendi Universal's drinks portfolio in 2000.

An Allied spokeswoman confirmed the group's interest. "A 5.4 per cent stake puts us in a good position but there are many options available." She declined to comment on whether the company, which is the world's fourth-biggest wine owner, was mounting a full bid.

Peter Lehmann's stock soared by 22 per cent after Allied revealed its stake in a statement to the Australian Stock Exchange, valuing the company at A$175.5m (£64m). Its chief executive, Doug Lehmann, said that he had not received any takeover approaches.

Allied started building its stake in Peter Lehmann, which makes the Stonewall, Clancy's and Mentor brands, last year. Allied's spokeswoman said the group was tempted by "companies that have very good assets in their own domestic areas and, equally, have good exports or export potential". Last year Allied beat off Lion Nathan of Australia to buy New Zealand's biggest wine maker, Montana Group.