On the up: Allied Domecq

ALLIED DOMECQ's shares rose 12 per cent last week after it completed the sale of its 3,500 pubs to Punch Taverns. Shedding the business now allows Allied to focus on developing its liquor brand, but it is still a long way behind Diageo, the world's biggest spirits company. It needs to increase its size and scale to compete effectively.

This rekindled speculation in the City that the company is now ripe for a takeover. Some suggested an alliance with Seagram of Canada or Brown Foreman of the US is likely. Others believe that Pernod-Ricard and Bacardi- Martini may also be interested. Some put a value of between pounds 4.5bn and pounds 5bn on Allied Domecq.

Allied has held talks with international drinks companies before, and was close to a deal with Seagram of Canada last year.