|
Investors swig Domecq
|
 |
September 27, 1999: 7:17 a.m. ET
U.K. spirits group jumps more than 10% on talk of bid from France's Pernod
|
LONDON (CNNfn) - London investors snapped up shares of British drinks group Allied Domecq Monday after a report that cross-channel rival Pernod Ricard of France is rummaging through its war chest for 4 billion pounds ($6.56 billion) to fund a takeover bid for Allied.
Allied shares surged almost 10.5 percent to 359 pence after Britain's Mail on Sunday newspaper reported Pernod's chief executive has had his eye on Allied for months, but has kept mum to keep Allied's stock price from overheating. Pernod shares rose nearly 5 percent to 66.20 euros.
Allied, the world's second largest distiller, behind U.K. rival Diageo (DGE), makes globally known wines and spirits such as Kahlua, Ballantine's whisky, Courvoisier brandy and Beefeater gin.
Its prestige portfolio notwithstanding, Allied has come under increasing pressure to find a partner ever since Guinness and GrandMet merged in December 1997 to form Diageo - owner of its own world-class brands such as Johnny Walker scotch, Smirnoff vodka, and Gordons gin.
Talks between Allied and Canada's Seagram foundered last year, though the prospect of a bid from Pernod could quickly rekindle Seagram's interest in Allied.
The Mail on Sunday said Pernod, which also makes fruit juices and the chocolate drink, Yoo-hoo, is eyeing an offer that would value Allied at 400 pence per share - more than 11 percent above Allied's stock price Monday.
The renewed speculation comes less than four months after reports emerged that the French group Pernod was amassing a 3 billion pound war chest to fund a bid for Allied's spirits' business.
Pernod has said it is eager to raise its international profile by branching out from its reliance on its namesake French brands, its Jamesons and Bushmills Irish whiskies and Jacob's Creek Australian wine label.
The Mail report, published Sunday, said Pernod's takeover operation is being orchestrated by investment bank Société Générale and a U.S. bank believed to be either J.P. Morgan or Morgan Stanley.
A Pernod spokesman refused to comment on the report, noting that it constituted the latest salvo in a flurry of speculation surrounding Allied. One industry source suggested the latest report is aimed at merely driving up Allied's moribund share price.
An Pernod-Allied combination would spawn a drinks group able to swallow most competitors and compete on equal footing with its nemesis, Diageo.
The British newspaper speculated that an offer from Pernod would trigger a parade of rival bidders, including possibly Seagram (VO) and Caribbean rum giant Bacardi.
In recent months, Allied has been shedding non-core assets to fully focus on its drinks businesses. In May, Allied negotiated the $4.5 billion sale of its U.K. pubs business to Whitbread.
--from staff and wire reports
|
|
|
|
|
 |
|
