Allied Domecq looks to Southcorp auction

British Drinks companies including Allied Domecq and Scottish & Newcastle (S&N) are monitoring closely an impending bid by Foster's for Southcorp, Australia's biggest wine producer. It is expected to trigger an auction of several well-known brands to satisfy competition regulators.

British Drinks companies including Allied Domecq and Scottish & Newcastle (S&N) are monitoring closely an impending bid by Foster's for Southcorp, Australia's biggest wine producer. It is expected to trigger an auction of several well-known brands to satisfy competition regulators.

Allied Domecq, led by its Australian chief executive Philip Bowman, has long tried to expand its global wine interests into Australia. Although it is not planning a counter bid for Southcorp it will examine any brands that come up for sale.

In the long term, analysts believe a successful bid for Southcorp by Foster's will herald an eventual sale of the enlarged group's beer assets. Foster's sees wine as a future growth market. S&N would be a lead bidder in any disposal of the Foster's brand, which it controls in the UK under licence.

Diageo, the world's biggest drinks group, is not thought to be interested in partnering Foster's in any break-up of Southcorp. McGuigan Simeon, a local Australian wine producer, announced yesterday it had already begun talks with Foster's, fuelling speculation in Sydney that an auction of some Southcorp brands will follow a successful bid.

On Thursday Foster's announced it had acquired a 19 per cent stake in Southcorp worth 584m Australian dollars (£237m), valuing the maker of Penfolds and Lindemans wines at A$3.1bn. It said it was still holding talks with Southcorp, which are expected to lead to a bid.

Should Foster's go ahead with a takeover, it may have to sell-off brands such as Wolf Blass or Beringer Founders Estate wines to allay any concerns of the Australian Competition and Consumer Commission. A combined Foster's and Southcorp would control 40 per cent of Australia's wine market.