Drinks rivals rule out counter offers

LONDON - Drinks giants Diageo and Allied Domecq had ruled out a bid for winemaker Southcorp but could look at businesses sold off in a Foster's linkup, sources said yesterday.

The world's two biggest spirits groups have growing interests in wine, but neither has a wine business in Australia.

Diageo's wine interests are focused in California and last month it paid US$260 million ($375 million) for the Chalone Wine Group to add to its other Napa Valley vineyards, Beaulieu and Sterling. After running its eye over Southcorp two years ago and deciding it was too expensive then, it is unlikely to return now.

Allied has wine interests in California, Argentina, Spain and New Zealand but failed to win control of Australia's Peter Lehmann Wines in 2003 which was snapped up for US$107 million and is likely to shy away from a high-priced Southcorp bid.

Allied, which owns Montana wines from New Zealand and Mumm and Perrier Jouet Champagne, is likely to look at any brands which a Foster's-Southcorp merger may have to sell for competitive reasons, such as Southcorp's Wynns brand.

"Allied's primary interest will be what brands become available when the deal is done," the source said.

The world's third largest spirits group, Pernod Ricard, is also unlikely to become involved in a counter bid as it already has Australian wine interests through its Jacob's Creek and Wyndham Estate brands.

A Foster's-Southcorp link-up would create the world's second-largest winemaker after US-based Constellation Brands.

- REUTERS