The United States’s Constellation Brands, the world’s largest winemaker, has called in investment bank Rothschild to advise it on a possible counter-bid for Allied Domecq, the British drinks group that last week agreed to a £7,5-billion takeover from Pernod Ricard of France.
The appointment will surprise industry analysts, who believed the bid from Pernod, in partnership with Fortune Brands of the US, would go through without a hitch.
Constellation Brands, headed by Richard Sands, is not big enough to go it alone, but observers say it is actively seeking partners for a break-up bid.
”They are very serious and are looking at all possible options,” said a source on Saturday night.
Potential allies for Constellation include Brown-Forman, maker of Southern Comfort and Jack Daniels. Rum-maker Bacardi may be persuaded to get involved, especially if it can take over Allied Domecq’s London stock-market listing.
Led by Ruben Rodriguez, Bacardi is a private company, but is considering becoming a plc.
”Reversing into Allied would be a neat solution,” said a drinks analyst.
Constellation may also recruit financial backers. But industry experts are not convinced that Constellation can pull it off.
”It is never easy to put together a bid from a consortium, as members must agree beforehand how they are going to carve up the target’s drinks portfolio, which is huge in Allied’s case.
”Pernod has been drawing up its plans for months, even years. Anyone else has to move fast, and do a lot of homework,” said one banker.
Constellation is interested in Allied’s wines, which are thought to be worth in excess of £1-billion. Bacardi may be attracted by its premium brands, such as Ballantine’s whisky.
Philip Bowman, Allied’s chief executive, is said to be disappointed to be selling out to Pernod as the British group is the bigger company. But Bowman could not launch a bid for Pernod because it is controlled by families who have blocked his approaches in the past. The same is true for most of his other international competitors.
Allied, however, is easy to acquire as it is a public company whose institutional shareholders have been looking forward to a bid for years.
Many have encouraged Bowman to seek a deal in order to create a company large enough to take on the world leader, London-based Diageo.
Allied would have to pay Pernod a break-up fee of £37-million if it accepted a competing offer within six months. — Guardian Unlimited Â