The latest Punch offer includes the unusual sweetener of giving Allied shareholders the option of choosing to take shares in Bass instead of cash. A maximum of 79 million Bass shares will be made available.
The market responded positively to the Punch offer, backed by Bass which has agreed to buy 650 pubs from Punch if it wins the deal. Bass shares closed up 22.5p at 963p, Whitbread was down 16p at 985p and Allied moved up 4p at 624p as analysts said the Punch deal appeared to offer better value. One said: "The Punch bid is worth slightly more than the Whitbread bid. Furthermore, the Punch bid is unconditional of shareholder approval and clearance by the Office of Fair Trading." Both sides spent yesterday claiming that their bid offered the greatest certainty for shareholders.
Punch said the timetable of its deal, which would conclude on 30 September, would not break the exclusivity agreement Allied signed with Whitbread. Hugh Osmond, Punch's chief executive, emphasised that the deal was unconditional. He said: "Our offer is significantly higher value than the Whitbread offer and it is significantly more certain."
The Whitbread camp countered with the accusation that the Punch offer was merely a front for Bass to expand and claimed the extended timetable meant months of uncertainty for shareholders.
David Thomas, chief executive of Whitbread, said: "Our confidence has risen somewhat now we've seen the whites of their eyes. Bass is with Punch as a puppet and a frontman. The offer tabled today has a great deal of uncertainty in it. Punch would be unable to step into Whitbread's shoes until 30 September but we can do it by 2 August."
Mr Thomas added that should the Allied board recommend Punch's offer to shareholders the battle was far from over, as Allied shareholders have until the end of the month to make up their minds.
"We will be asserting our case very vigorously to Allied Domecq shareholders over the next three weeks," he said.
Whitbread made it clear that it would not raise the stakes further but Punch indicated that although the current bid expired at midnight it was not necessarily its highest offer. Mr Osmond said: "Ours is an offer which can only go up, theirs can go down as well as up."