Punch may sweeten offer for Allied Domecq pubs

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The Independent Online
THE CITY believes Punch Taverns will sweeten its pounds 2.925bn cash bid for the 3,600-strong Allied Domecq's pub estate at the eleventh hour.

Punch yesterday said it would produce a revised offer tomorrow which would address all the concerns raised by the board of Allied Domecq when they opted to back Whitbread's rival pounds 2.877bn cash and paper bid.

Wednesday's offer will differ from the current Punch bid and is expected to clarify issues related to financing and the vexed question of potential warranty claims but it is not expected to put more cash on the table.

Hugh Osmond, the chairman of Punch Taverns, said that Wednesday's offer is intended to clear up all the attendant legal and financial issues surrounding the offer, many of which have left shareholders confused. "Our offer will address all the issues that the board has raised," he said.

However, sources close to the bid added that if, after that, shareholders remain unswayed, the option of more money will be considered.

"If every institution comes back and says we've addressed the non-value issues but that more money is still needed then we'll think seriously about it," one source said.

A major shareholder yesterday said the expectation in the City was that Punch would raise its bid. "People are expecting Punch to up it," he said.

He added that the vast majority of shareholders had not decided whether to back Punch or Whitbread and were waiting to see what Punch came up with.

"We've not come to a firm view. We will study the new document and talk to the Allied board about it again. I suspect very few people are firmly committed at this stage," he said.

A source close to Allied Domecq said that money was not the main issue at stake but he added Allied's board had a duty to consider any new offer from Punch.

"This is not like two competing bids for a publicly listed company where all you do is look at the headline numbers. Other things, such as certainty and warranty, are attached to this bid.

"It depends how much the Punch bid is and what happens to the other issues surrounding it," the source said.