Consortium mulls £7.7bn Allied bid

THE race has hotted up in the battle for control of drinks giant Allied Domecq. A consortium led by wine maker Constellation Brands and Jack Daniel's owner Brown-Forman, along with private equity firms Lion Capital and Blackstone, has made a preliminary bid approach.

The aim will be to trump a joint deal by Pernod Ricard of France and America's Fortune Brands, which are prepared to pay 670p a share.

Analysts expect that the new consortium - which has been allowed limited access to Allied's books - will attempt to match Allied chief executive Philip Bowman's 700p-a-share valuation of the firm. At that level the group would be worth £7.7bn.

If successful the quartet are expected to carve Allied up into its constituent parts. Constellation will be eager to get its hands on Allied's wine business, but there may be some arguments over how Allied's spirits such as Ballantine's Scotch whisky and Courvoisier brandy are split among the partners.

Neither is it certain that the consortium will be able to drive out the cost savings and synergies that make the deal commercially viable for Pernod.

Diageo, the world's largest spirits firm, added its twist to a heady cocktail of alternative bidders. The Guinness brewer said it intends to 'evaluate opportunities to make acquisitions'. The City took this to mean that it is interested in carving up Allied with the help of its competitors.