The price of the deal will be close to pounds 250m, producing a substantial boost to Allied's profits in the current year to February.
The buy-in team is being led by Leon Allen, the American chairman of Devro, the UK sausage skin manufacturer. Mr Allen previously made money when he led the management buy-out team that bought the Del Monte canned fruit and juice business from RJR Nabisco for pounds 230m in May 1990. Del Monte was sold to Royal Foods of South Africa for pounds 370m in December 1992.
The deal is backed by venture capitalists, led by Prudential Venture Managers. Schroder Ventures is also backing the deal.
The sale of the Tetley, a profitable business, is a part of Allied's strategy to sell non-core operations. The company wants to convert itself into a business with global brands that can sell in new markets, particularly South-east Asia.
Last December, the company completed the acquisition of Pedro Domecq, the Spanish spirits group.
So far, the company has disposed of pounds 500m worth of food businesses. Disposals include Lyons Cakes and the Lyons seafood businesses. The sale of Tetley would make the programme to dispose of its food businesses virtually complete.
The company has yet to find a buyer for its stake in its brewing joint venture with Carlsberg, which it is also trying to sell.
The disposal programme has to date reduced Allied's gearing from 78 per cent to 63 per cent, but last March Allied warned that the disposals would cause some short-term dilution of the company's earnings.
The disposals will allow Allied to concentrate on developing its spirits brands, which include Teacher's whisky and Courvoisier brandy, as well as its retailing operations. Before the sale of Tetley, the whisky and retailing businesses accounted for 80 per cent of the group's profits.
On the retailing side, the company operates 4,300 pubs through chains such as Tetley, Ansells and Ind Coope. It has 1,500 Victoria Wine off- licences and 7,500 Dunkin' Donuts and Baskin-Robbins franchise outlets.
Allied is currently the world's second largest spirits company, behind Canada's Seagram group.
On the proposed sale of Tetley, a spokesman said: "When we have an announcement to make, we will make it."