US giant muscles in on Domecq bid scene

AMERICAN winemaker Constellation Brands today launched a rival takeover offer for British giant Allied Domecq in a move dramatically escalating the £7.4bn bid battle.

Allied, the world's number two drinks group, had previously accepted a 670p-a-share offer from France's Pernod Ricard. Today, it said it had received an 'indicative proposal' from Constellation but stressed the offer was highly conditional.

It told investors it would continue to recommend the French tilt. Domecq shares rose 10p to 701p.

Constellation is bidding as part of a consortium including Jack Daniel's maker Brown-Forman, also of the US. Also in the bidding group are venture capitalists Blackstone and Lion Capital.

Waiting in the wings and yet to put its cards on the table is Diageo, which has retained Lehman Brothers to consider whether it should launch its own offer.

Diageo, the world's biggest drinks producer, would face serious competition issues if it were to launch a bid. That has led to speculation that it must be considering a carve-up with rival drinks companies.

While it is too early to predict the outcome of the battle for Domecq headed by chief executive Philip Bowman, Pernod Ricard is seen as being in a strong position due to the recommendation of its offer by the Allied board and the fact that it has already done a lot of detailed due diligence.