BIG THREE TO BECOME BIG TWO?

Published: 23 July, 2008

The share price of Allied Domecq soared 96p to 633p last week after it emerged that Pernod Ricard could be planning a takeover.

Pernod, the third-biggest drinks company in the world, with sales of 2.45 billion, made its approach last week in conjunction with US consumer goods company Fortune Brands, which owns Jim Beam bourbon. Allied is the second-biggest drinks group in the world, with sales of 3.23 billion.

Both sides have issued terse statements in response to media interest, confirming that Pernod is in discussions with Allied and is working with Fortune Brands. Both add that there can be no certainty that an offer will ultimately be forthcoming', and that a further announcement will be made in due course'. If the move went ahead, it would see the most successful Australian wine brand, Pernod's Jacob's Creek brand, under the same roof as the New Zealand leader, Montana, and the number one Spanish brand, Campo Viejo, which are both in Allied's portfolio.

Diageo is too big to make an outright bid, but would no doubt be keen to pick any fallout brands should they arise. The company refused to comment on the possibility of a deal at this stage.

Bacardi cannot be ruled out of the running, either, particularly in the light of the long-running feud between the company and Pernod Ricard over their white rums. However, a spokeswoman told Harpers that the company does not comment on industry rumours or speculation'.

If Pernod Ricard succeeds, it is expected to pay in the region of 7.5 billion, or 9.2 billion including debt.

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