Pernod readies £7.4bn Allied bid

FRENCH drinks giant Pernod Ricard hopes to table an agreed bid this week for Allied Domecq, valuing its British rival at up to £7.4bn.

Pernod and its American backer Fortune Brands are expected to announce the cash and shares deal on Thursday to coincide with Allied's interim results.

The market has been hoping for a bid of up to 675p per share, but it is understood that a deal at 670p or less is being negotiated. Allied shares closed on Friday at 640p. Though shareholders are likely to welcome a formal offer, insiders suggested that there could be some disquiet from several leading investors who did not want to hold Pernod shares in their portfolios. It is thought that Pernod is preparing to offer Allied's shareholders as much as 25% of the bid price in shares.

Pernod, which numbers Chivas Regal and Jacob's Creek among its brands, and Fortune, the owner of Jim Beam bourbon, have spent months trying to agree on how Allied's brands would be split after any deal.

Allied owns some of the world's best-known spirits brands, including Kahlua and Malibu, as well as a large wines portfolio and Dunkin' Donuts.

Both sides have been keen to thrash out the details before tabling a bid so that a deal can be completed as quickly as possible. This would deter rival offers.