Pernod poised to deliver £7.4bn bid for Allied Domecq

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The Independent Online

Pernod Ricard and Fortune Brands, the French and US drinks giants, are expected to finally table a formal £7.4bn offer this week for the London-listed Allied Domecq, the world's second largest spirits producer.

Pernod Ricard and Fortune Brands, the French and US drinks giants, are expected to finally table a formal £7.4bn offer this week for the London-listed Allied Domecq, the world's second largest spirits producer.

The bid is thought most likely to be made on Thursday, when Allied announces its interim results for the six months to 28 February 2005.

Pernod and Fortune confirmed earlier this month that they were in talks with Allied, whose brands include Beefeater gin and Malibu, but said the talks were at an early stage and may not lead to a formal offer.

The predators are believed to have spent the past few weeks deliberating on what level to pitch its bid. Its opening offer is expected to fall between 650p and 675p a share.

Although Allied's chief executive, Philip Bowman, is understood to be interested only in a mainly cash offer for his company, it is thought that part of the bid will be made in Pernod shares.

Pernod has joined forces with Fortune to try to fend off US and UK competition authorities, by splitting some of the UK group's brands. Allied's Courvoisier cognac brand, combined with Pernod's Martell, for example, would leave the combined group controlling 60 per cent of the UK cognac market. Competition authorities tend to object to companies holding more than 25 per cent of any one market.

No other companies have yet formally expressed interest in bidding for Allied. However, it is believed the likes of Bacardi and Diageo are keen to try to get their hands on several of Allied's major brands. SPI Group, which owns the Stolichnaya vodka brand outside Russia, is also believed to be considering a bid for some of Allied's brands.

Although it is still unclear which parts of the Allied business would be kept by Pernod, it is thought that Allied's wine business would be one of the first to be sold in the event of a successful Pernod/Fortune bid. Allied's restaurant brands, which include Dunkin' Donuts, are also likely to be sold to a third party.

Shares in Allied have risen some 19 per cent since news of the talks first surfaced earlier this month. The stock closed at 640p on Friday, giving the company a market value of £7.1bn.

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