Allied investors pile pressure on Pernod over shares deal

Shareholders in Allied Domecq have highlighted shortcomings in Pernod Ricard's £7.4bn bid for the wine and spirits group, and warned that they are likely to sell the French company's shares if they are forced to accept them in part payment for their Allied holdings.

Shareholders in Allied Domecq have highlighted shortcomings in Pernod Ricard's £7.4bn bid for the wine and spirits group, and warned that they are likely to sell the French company's shares if they are forced to accept them in part payment for their Allied holdings.

Some Allied shareholders believe Pernod's 670p-a-share offer is a disappointment, believing that 700p-a-share more accurately reflects Allied's value.

The shareholder reaction comes as Constellation Brands, the world's biggest winemaker, confirmed yesterday it was mulling a bid for Allied. The statement sent shares in Allied, the maker of Malibu rum, above Pernod's offer price for the first time, finishing up 1.3 per cent at 671.5p.

Michael Gifford, a fund manager at F&C Asset Management which owns 2.34 per cent of Allied, said he would sell the Pernod shares he received for his stake as they were unsuitable for his income fund. If others follow suit, this will create a serious flow back of Pernod shares on to the Paris stock market.

"I think 670p is lacking a bit. Certainly, we were not desperately excited by the price. If nothing else turns up it will probably go through by a lack of enthusiasm from anyone else.

"The reason I hold Allied Domecq shares is because I think they have a fantastic set of brands which ought to command a premium.... A number [of shareholders] have held Allied Domecq through thick and thin and are not eager to relinquish shares for a poor price."

Some large Allied shareholders were taking profits yesterday. Schroders, the company's second-biggest shareholder, reduced its holding from above 5 per cent to 4.5 per cent, raising £40m in the process.

Constellation said it was in the early stages of evaluating its options and was talking to a number of potential partners.

Neil Wesley of Morley, the fund management arm of Aviva, the insurer, said: "Pernod and Allied have put in break clauses for the very reason that they are experienced and that there is potential for speculation regarding Constellation."

Mr Gifford said: "I think 700p-a-share would be a reasonable sighting shot for these guys if they seriously wanted to trounce the [Pernod] bid."

Constellation's most likely bidding partner is Brown Foreman, the maker of Jack Daniel's, with the possibility of private equity funds also contributing to a deal.