Drinks giant 'on brink of €11bn takeover'

Drinks giant Pernod Ricard should be ready to serve up a £7.4bn (€10.8bn) takeover deal for rival Allied Domecq later this week, reports indicated today.

The pair are expected to announce on Thursday – the date of Allied’s half-year results – that they have agreed terms on a takeover proposal from Pernod.

The France-based group is working in conjunction with Jim Beam bourbon owner Fortune Brands on an offer to Allied shareholders which could be worth up to 675p a share, valuing the Bristol-based company as much as £7.5bn (€11bn).

However, the Mail on Sunday said that while the market hoped for an offer of up to 675p, it was more likely a figure of 670p or less was being negotiated.

The success of the deal is still likely to depend on the reaction of regulators as the two companies may dominate certain markets.

It is expected that Pernod may choose to dispose of Allied’s cognac brand Courvoisier as the French company already owns Martell. There may also be concern about Pernod’s strength in the gin market if it takes on Beefeater.

Analysts believe Fortune has been brought on board so it can take on some of the brands and so enable Pernod to overcome the regulatory issues.

Allied confirmed earlier this month that it was in takeover talks with Pernod, although it added that talks were still at an early stage.

The UK company, which has 13,000 staff worldwide, also owns Tia Maria and the food brands of Dunkin Donuts and Baskin-Robbins. The key brands in the Pernod estate include Havana Club, Jacob’s Creek and Jameson.

In 2001, it acquired a slice of Seagram’s drinks portfolio in a move that doubled its size in the spirits sector and made it one of the top three players in the wine and spirits market. The proposed tie-up with Allied would put the pair on the heels of industry leader Diageo.

Fund manager Gerrard expects Allied’s pre-tax profits for the six months to February 28 to come in at £290m (€424.7m), against £266m (€389.5m) last time.