US hopeful lines up for a crack at Allied Domecq

Spirits group Allied Domecq rose 1.3 per cent, adding to recent gains to close at a record high of 668p, spurred by news that the world's biggest wine company, Constellation Brands, was considering a joint counterbid.

Allied, the owner of Montana Wines, has already agreed to be taken over by Pernod Ricard and its US partner, Fortune Brands.

"Constellation is at an early stage of evaluating its options with several potential partners and there is no certainty that this process will lead to an approach being made to the company," Constellation said.

Sources said Constellation was forced into issuing a statement by the UK Takeover Panel after a number of newspaper reports linked it with a possible bid for Allied.

Last week, Pernod and Fortune Brands agreed on a largely cash takeover of Allied, which valued Allied at 7.4 billion ($19.7 billion) or 676p a share.

Under the deal, Allied shareholders are being offered 545p a share in cash plus 0.0158 Pernod shares for every Allied share.

The Pernod deal has been structured as a scheme of arrangement, potentially a faster way of completing a full takeover in Britain. But Pernod hopes to seal the deal by July, leaving only three months for another bidder to act.

Constellation has hired investment banks Rothschild and Merrill Lynch to consider a bid for Allied, while press reports have suggested that Constellation could partner with US group Brown-Forman and privately owned Bacardi in a bid.

Rothschild is close to Brown-Forman and Bacardi, having advised the pair on a joint bid for Seagram in 2001, which ultimately went to Pernod and its then partner, Diageo.

Sources said Constellation was not considering an equity issue should it decide to go ahead with an approach for Allied.

Analysts have always said there was a chance of a counterbid. And Pernod and Fortune Brands rushed through their agreed deal with Allied, after first confirming their interest on April 5, in a bid to squeeze out rival suitors.

Under the scheme of arrangement, Pernod has yet to send out its offer documents to shareholders, meaning no date for voting has yet been set. Once it has, the Takeover Panel, which presides over mergers and acquisitions, will have to set an appropriate date for rival bidders to show their hand.

Constellation has been aggressively buying wine labels, such as Robert Mondavi last December and Australia's BRL Hardy in 2003, and owns the Ravenswood and Estancia wine brands.

It is the seventh-largest spirits group in the world, selling around 13 million 12-bottle cases a year.

- REUTERS