Cantrell & Cochrane and will only sell its entire stake of 49.6 per cent to Allied Domecq if it is offered an amount in excess of the valuation that KMPG has placed on the Guinness stake.

The Competition Authority ruling that allowed Guinness go ahead with the £33 million takeover of the outstanding 70 per cent of United Beverages was conditional on Guinness reducing its stake in C&C to a maximum of 10 per cent.

Sources have told The Irish Times that, given the scale of the discount that KMPG applied to Guinness' stake in C&C, Guinness sees more sense in retaining 10 per cent in anticipation of a higher price, if and when Allied Domecq sells C&C to a trade buyer or floats the Irish company on the stock market.

KMPG is understood to have valued the Guinness 49.6 per cent stake at £260270 million and the 39.6 per cent stake that must be sold to comply with the Competition Authority on a pro rata basis - around £220 million.

Guinness is understood to be "not ecstatic" about the value KPMG has placed on its shareholding in C&C, but accepts that the valuation is "within the bounds of acceptability", as one source has described it.

Allied Domecq has 28 days from today - until June 23rd - to decide whether to exercise its option to buy the Guinness stake at the KMPG valuation price. If Allied Domecq wants to take 100 per cent control of C&C, then it seems it will have to negotiate separately with Guinness on a price for the remaining 10 per cent stake. In this situation, Guinness is likely to demand substantially more for that residual stake than the KPMG valuation.

Whatever option Allied Domecq takes - and it is conceivable, albeit unlikely, that it could reject the KMPG valuation entirely and try and negotiate a lower price with Guinness - industry sources believe that it will move quickly to demerge C&C from its global drinks business and float the Irish company on the Dublin and London stock markets. A trade sale of C&C to a third party is seen as a far less likely option.

While KMPG valued the Guinness 49.6 per cent stake in C&C at £260270 million, that valuation includes a near 25 per cent discount on C&C's likely market value - reflecting the minority nature of the shareholding and the perceived lack of saleability of the shareholding to a buyer other than Allied Domecq.

Market sources believe that, in the event of a flotation, Allied Domecq will opt to retain its majority shareholding in C&C, to allow it to consolidate C&C profits into its own profit and loss account. Institutional investors are likely to be unbothered about such an arrangement - there have been plenty instances where Irish public companies have had a majority shareholder - although the Stock Exchange is likely to insist on safeguards for outside investors such an independent chairman and a balance on the board between Allied Domecq and shareholder interests.

At current market prices and multiples, and given the likely pent-up demand for C&C shares from Irish institutions in particular, a starting market capitalisation of around £650 million for a company with after-tax profits of £45 million last year and £65 million cash in its balance sheet - does not seem unreasonable.

That sort of market capitalisation would value Guinness's residual stake in C&C at around £65 million - compared to the approximate valuation £55 million implied by the KPMG valuation. It would also allow Allied Domecq make a sizeable profit on its enlarged C&C stake if it subsequently opted to reduce its stake to concentrate on the global branded spirits industry.

In the long-term, analysts in London believe that a group like Allied Domecq cannot credibly retain control of a company like C&C in the long-term.

C&C has business which spans alcoholic and non-alcoholic drinks and beverages as diverse as Tullamore Dew whiskey, Ballygowan mineral water, Club Orange, Carolans Cream Liqueur, Bulmers and Ritz cider, Irish Mist liqueur and also Italian liqueurs such as Frangelico.

It is a much different operation from Allied Domecq, which has made it clear that it intends to concentrate on its major spirits brands such as Teachers whisky and Beefeater gin.

Given the scale of the consolidation in the international spirits industry - evidenced by the Diageo merger - analysts believe that Allied Domecq will have to find a Diageo-type partner. In such a situation, it is difficult to see where a company like C&C fits in, despite C&C's strong profits record and portfolio of brands.