Gatecrashers

26 April 2005 By Simon Nixon

Allied is the spirits industry’s last major consolidation play. That’s why Constellation and BrownForman may try to counter Pernod’s offer. But a counterbid is likely to trigger the same costs with fewer synergies. It will be hard to pull together.

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Constellation Brands is considering making a counterbid for Allied Domecq, following last week's agreed offer from Pernod Ricard. The US drinks group has appointed NM Rothschild and Merrill Lynch to advise it on a possible transaction. Constellation, which has a market capitalisation of $6.8bn and net debt of $3.3bn, would need to find partners to help finance a bid.

BrownForman is also reported to be considering a bid for Allied and is being advised by Lazard.

Pernod Ricard has offered a mixture of cash and shares currently worth 677p per Allied Domecq share, valuing the UK drinks group at just over £7.4bn.

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