Deadline set for Allied bid

A US-based consortium was today given an ultimatum to bid for drinks giant Allied Domecq within the month or walk away.

The June 29 deadline set for the consortium led by Constellation Brands came as Allied warned that the takeover tug-of-war was threatening its financial performance.

Allied flagged a “change in behaviour” among its customers and suppliers after it agreed to be swallowed by French rival Pernod Ricard in a €10.7bn deal and was subsequently approached by Corona beer maker Constellation.

Competitors were also attempting to grab market share while Allied was distracted by the takeover, believed to be through targeted price cutting and promotions.

Allied said it had taken action to support its business and its expectations of earnings growth in the high single-digits remained unchanged.

But the company added: “While these indications are encouraging, the unavoidable disruption caused by the (Pernod) offer and the approach from the consortium may yet have a short-term impact on the performance of the business.”

Allied is known for brands such as Beefeater gin, Tia Maria and Courvoisier cognac, as well as Ballantine’s and Teacher’s scotch whisky.

In a trading update, Allied said volumes of its core wines and spirits brands rose during March and April and its Quick Service Restaurants business, which includes Baskin-Robbins ice cream and the Dunkin’ Donuts chain, had also continued to grow.

News of the deadline set by the Takeover Panel for Constellation to bid came on the day that Allied issued the offer document for its takeover by Pernod.

Allied said its shareholders will be asked to approve the Pernod offer on July 4 unless a counterbid emerges. Pernod expects to complete the deal on July 26.

Pernod has forged a transatlantic alliance with US-based Fortune Brands to fund its bid, which if successful would give it the muscle to challenge market leader Diageo.

Constellation Brands – the world’s biggest winemaker – has teamed up with Southern Comfort owner Brown-Forman and two US private equity firms to attempt to gatecrash the takeover.

It is continuing to talk to Allied bosses and has made an indicative proposal, but a formal bid is conditional on due diligence and confirmation of financing.

Allied chairman Sir Gerry Robinson said: “It is too early to determine whether the indicative proposal can translate into a firm offer.”