Allied Domecq receives offer from consortium

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The Independent Online

The bidding war for Allied Domecq, the Beefeater gin and Tia Maria drinks company, intensified yesterday when the company said it had received an indicative offer from a consortium led by the US group Constellation Brands.

The bidding war for Allied Domecq, the Beefeater gin and Tia Maria drinks company, intensified yesterday when the company said it had received an indicative offer from a consortium led by the US group Constellation Brands.

At this stage the offer is said to be "highly conditional" and Allied intends to proceed with an offer it agreed in April from its arch-rival Pernod Ricard.

The French group has bid 670p a share, valuing Allied at £7.4bn. But Allied shareholders have said they believe a bid of 700p a share reflects the value of the business more accurately.

The Constellation consortium's approach requires the satisfaction of a detailed due diligence process, although the group has access to Allied's data room containing the relevant financial material. The offer is also conditional on confirmation of financing and a "number of other significant conditions", according to Allied.

Constellation, the world's biggest wine company, has formed the bidding consortium with Brown-Forman, the US maker of Jack Daniel's, and two private equity groups: Lion Capital, formerly Hicks Muse Europe, and Blackstone.

Lion Capital recently hired Javier Ferran, a former Bacardi executive, to bolster its acquisition team and has a history of consumer goods deals. It once owned the Mumm and Perrier Jouët champagne brands, now part of the Allied portfolio. Allied said in a statement it was too early to ascertain whether the indicative proposal will translate into a firm offer.

Allied's shares closed up 1p at 692p yesterday, reflecting the market's expectation of a rival bid emerging from the Constellation-led bid. If successful the consortium would split up the Allied portfolio between it. Constellation is thought to be interested mainly in the spirits brands. The private equity bidders will also be interested in taking on Allied's quick-service restaurant business, which includes Dunkin' Donuts and Baskin-Robbins.

Diageo, the world's biggest drinks company, said last month it was evaluating acquisition opportunities, without naming Allied.

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