Diageo in the frame for Allied takeover?
Chief Executive, Paul Walsh indicates that the company is considering options to back bids from rivals.
03/06/05 The world’s largest spirits group Diageo could back the Constellation consortium to acquire its chief rival Allied Domecq or even the world’s third largest group Pernod Ricard in doing so.
In a question and answer session following a lecture to the Wine & Spirit Education Trust, Diageo chief executive Paul Walsh said, “If certain brands become available, we would be a well-financed player to either help the [Constellation] consortium or help Pernod up their bid.” It was the first time he had given specifics related to the Allied takeover.
In April, Pernod agreed to acquire Allied for $14 billion in cash and stock. Upon the close of that deal, Fortune Brands will pay Pernod $5.3 billion -- or almost 50% of the total cash involved for a stable of Allied's brands.
A few weeks later, the Constellation consortium that includes Brown-Forman and two private-equity groups approached Allied to express interest in making an offer.
While Pernod's deal involves a breakup fee, Allied remains available to consider other offers, opening the door for the Constellation consortium.
Constellation Brands – the world’s biggest winemaker – has teamed up with Southern Comfort owner Brown-Forman and two US private equity firms in an attempt to trump the takeover. The consortium has been given a deadline of June 29 to table an official bid or walk away.
