US group may trump Pernod bid for Allied

The Pernod Ricard bid for Allied Domecq that could cost C&C up to €2.5 million is facing competition from a partnership of global drinks groups.

Shares in Allied Domecq hit an all-time high yesterday and Pernod Ricard's fell on the prospect of US group Brown Forman and wine giant Constellation Brands trumping Pernod's agreed €11 billion bid for the British spirits group.

Allied shares jumped as high as £7 (€10.35), well above the agreed deal value of about £6.70 a share, making them the second-biggest mover in the FTSE 100 index.

The fact that the consortium is backed up by investment funds makes a counter offer and a potential stock-market battle much more serious," said spirits sector analyst Francois-Xavier Archambault at CM-CIC Securities in Paris.

"Clearly the market has come to the conclusion that Allied Domecq is the last major transaction in the sector," said Tim Rees, director of UK equities at Insight Investment. He added that investors would need to be patient to see if a rival bid materialises.

A rival bid would take the pressure off Irish group C&C, which distributes Allied Domecq's products - including Tia Maria and Beefeater gin - in the Republic, while Allied distributes C&C products such as Tullamore Dew and Irish Mist in international markets.

However, Pernod owns Irish Distillers Group and has its own distribution network in the Republic and is thought unlikely to distribute its competitor's products abroad.

Analysts estimate that the end of the relationship could cost C&C between €1.5 million and €2.5 million.

The Irish company has not commented on the issue up to this point and is unlikely to comment until its 2004 results are published on May 10th.

However, it is thought that it regards the fallout from a Pernod takeover of Allied as a disruption rather than a major issue.

The group has a track record in bringing new products and brands on board, while there is a feeling in the industry that it should have little trouble getting a new distributor for its products abroad. - (Additional reporting: Reuters)