Diageo pays £200m for Pernod's Bushmills

Diageo, the world's largest drinks company, yesterday threw itself behind Pernod Ricard's £7.5bn bid for Allied Domecq after clinching two brands from the deal.

Diageo, the world's largest drinks company, yesterday threw itself behind Pernod Ricard's £7.5bn bid for Allied Domecq after clinching two brands from the deal.

Pernod has agreed to sell its Bushmills Irish whiskey brand to Diageo for £200m and has also given Diageo the right to buy most of Allied's Montana wine brand for £320m if Pernod succeeds in winning control of Allied. In return, Diageo has pledged not to join any other rival bidding consortium for Allied.

It is now down to Constellation Brands, the US group which is working in conjunction with the private equity groups Hicks, Muse, and Blackstone, to trump Pernod's 678p cash and share offer. Diageo had said it may join the Constellation team depending on what brands were available and the threat of a counter offer involving Diageo has buoyed Allied's share price. The Constellation consortium has been given until 29 June to table a bid.

Diageo will have to get regulatory clearance, but the two brands plug gaps in its current portfolio. It owns the Bells, Johnnie Walker and J&B Scotch brands, but does not own any Irish whiskey. The deal with Allied's Montana business will also provide a major boost to Diageo's wine portfolio. Its wine assets are located primarily in California.

Paul Walsh, the chief executive of Diageo, said: "Bushmills is one of the oldest Irish whiskey brands and gives Diageo, for the first time, an important presence in this growing category. Montana is one of the leading New Zealand wine brands and is the number one New Zealand export brand."