Seagram in talks with Allied over spirits merger

Allied Domecq is holding merger talks with Seagram, the Canadian leisure giant, along with some of the world's largest spirits companies. Andrew Yates reports on the group's attempts to form a powerful drinks cocktail and take on the might of the newly merged Guinness and Grand Metropolitan Group.

City observers believe that Allied is most likely to strike a deal with Seagram to create the biggest spirits business in the world with sales of more than pounds 4bn a year. Goldman Sachs, the US investment bank who has been appointed to advise on Allied's options, has placed Seagram at the top of the list of potential partners. However, the group is understood to be holding talks with other big names in the industry including Bacardi- Martini, Pernod-Ricard, Brown-Forman and American Brands to create a world beating drinks Goliath. All these groups have brands that Allied would dearly love to get hold of.

One analyst said: "At this stage you can't exclude any of the big players in the market, although Seagram is an early front-runner. It has the best match of brands with Allied."

Allied has come under pressure to do a deal after Guinness and Grand Met announced its intention to merge last May, to form Diageo.

Goldman Sachs is understood to be pushing Allied to seal a partnership as soon as possible. However, a deal is unlikely to be concluded in the immediate future. Sources suggest Allied is determined not to rush things and has no set timetable for the conclusion of talks. The City would like to see Allied sort out a deal within the next six months as Diageo begins to exert its huge market power.

Allied is the second-biggest spirits group in the world ahead of Seagram, which is number three in the market. A spirits merger would bring together a vast array of brands, including Teachers and Ballantine's whisky, Courvoisier cognac and Beefeater gin from Allied and Seagram's Chivas Regal whisky, Martell cognac and Mumm champagne. At the moment the two groups are planning a complete merger of their spirits businesses, although they could consider just combining distribution networks.

However Seagram and Allied have ruled out a full merger. Seagram's entertainment business which includes Universal Studios in Hollywood sits uneasily with Allied's pub and retail interests which range from the Firkin chain to Dunkin' Donuts. Allied has annual spirit sales of pounds 2.5bn compared with Seagram's pounds 1.6bn, which means Allied would probably take a majority stake in the combined business that could eventually be demerged and floated on the Stock Exchange.

If Allied manages to form a partnership, it is likely to spark another wave of consolidation in the drinks industry.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Collections Agent

£14000 - £16000 per annum: Recruitment Genius: This company was established in...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40k: SThree: SThree are a global FTSE 250 busi...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: SThree are a global FTSE 250 ...

Reach Volunteering: Trustees with Finance, Fundraising and IT skills

Voluntary and unpaid, reasonable expenses reimbursable: Reach Volunteering: St...

Day In a Page

Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
Tunisia fears its Arab Spring could be reversed as the new regime becomes as intolerant of dissent as its predecessor

The Arab Spring reversed

Tunisian protesters fear that a new law will whitewash corrupt businessmen and officials, but they are finding that the new regime is becoming as intolerant of dissent as its predecessor
King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

Academic claims King Arthur was real - and reveals where he lived

Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
Who is Oliver Bonas and how has he captured middle-class hearts?

Who is Oliver Bonas?

It's the first high-street store to pay its staff the living wage, and it saw out the recession in style
Earth has 'lost more than half its trees' since humans first started cutting them down

Axe-wielding Man fells half the world’s trees – leaving us just 422 each

However, the number of trees may be eight times higher than previously thought
60 years of Scalextric: Model cars are now stuffed with as much tech as real ones

60 years of Scalextric

Model cars are now stuffed with as much tech as real ones
Theme parks continue to draw in thrill-seekers despite the risks - so why are we so addicted?

Why are we addicted to theme parks?

Now that Banksy has unveiled his own dystopian version, Christopher Beanland considers the ups and downs of our endless quest for amusement
Tourism in Iran: The country will soon be opening up again after years of isolation

Iran is opening up again to tourists

After years of isolation, Iran is reopening its embassies abroad. Soon, there'll be the chance for the adventurous to holiday there
10 best PS4 games

10 best PS4 games

Can’t wait for the new round of blockbusters due out this autumn? We played through last year’s offering
Transfer window: Ten things we learnt

Ten things we learnt from the transfer window

Record-breaking spending shows FFP restraint no longer applies
Migrant crisis: UN official Philippe Douste-Blazy reveals the harrowing sights he encountered among refugees arriving on Lampedusa

‘Can we really just turn away?’

Dead bodies, men drowning, women miscarrying – a senior UN figure on the horrors he has witnessed among migrants arriving on Lampedusa, and urges politicians not to underestimate our caring nature
Nine of Syria and Iraq's 10 world heritage sites are in danger as Isis ravages centuries of history

Nine of Syria and Iraq's 10 world heritage sites are in danger...

... and not just because of Isis vandalism
Girl on a Plane: An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack

Girl on a Plane

An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack
Why Frederick Forsyth's spying days could spell disaster for today's journalists

Why Frederick Forsyth's spying days could spell disaster for today's journalists

The author of 'The Day of the Jackal' has revealed he spied for MI6 while a foreign correspondent