Shake-up looms at Allied-Domecq

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The Independent Online
PRESSURE is mounting on Michael Jackaman, chairman of Allied Domecq, this week as the drinks giant unveils sharply reduced profits and faces yet more grief from Friday's further collapse of the Mexican Peso.

The market is clamouring for a management shake-up, but although the deputy chairman, Sir Christopher Hogg, has been earmarked for the the top job, sources say no date has yet been set for 59-year-old Mr Jackaman to retire.

Sir Christopher, currently chairman of Reuters and Courtaulds, is a respected City figure and an early announcement would give a fillip to a flagging share price, analysts say.

Final figures on Tuesday, the first full set since Allied Lyons' pounds 739m merger with Spain's Pedro Domecq, may also see the dividend cut and have yet to show the full horror of troubles in Latin America.

Pre-tax profits are expected to come in at pounds 460m-pounds 560m after hefty restructuring charges, against pounds 635m for the year to end-August 1994.

Allied took over Domecq in a widely hailed deal in March 1994, which catapulted it from eighth to second in the world's spirits league, just behind Grand Metropolitan and ahead of Guinness, with brands such as Teacher's whisky and Beefeater gin.

It has since sold most of its famous name food businesses, including Tetley tea and Lyons cakes, in a string of disposals.

Best known for sherry in Britain, Domecq's best-selling brands are Sauza Tequila and Presidente brandy in Mexico.

The fanfare has since died, however, after the peso and the Mexican economy plunged last December, leaving the full effect to be felt this coming winter. Friday's further collapse, on talk of unrest in the military, sent Allied's shares down 11.5p to 494.5p, against 561p after the deal and a pounds 651m rights issue last March.

Allied also has unfinished business in finding a buyer for its 50 per cent stake in the Carlsberg-Tetley brewing joint venture, expected to be hit by up to pounds 90m of restructuring provisions. Favourite candidates include Bass and Whitbread, but no deal is understood to be near. "Carlsberg- Tetley was hit hard in the first half, and people will be looking for signs of improvement there," said John Spicer, drinks analyst at brokers UBS Warburg.

"The focus of attention will also be very much on the spirits division. All areas have been tough, especially Europe. Combined with that there are all the problems in Mexico."

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