Diageo considers help for Allied bidders
Drinks giant Diageo today confirmed it had expressed interest in funding one of the rival companies vying to take over Allied Domecq.
The maker of Guinness and Smirnoff vodka said it was well-placed to back French firm Pernod Ricard or the consortium led by US firm Constellation Brands in return for ownership for certain spirits brands.
Chief executive Paul Walsh told the Financial Times: “If certain brands become available we would be a well-financed player to either help the consortium or help Pernod up their bid.”
He said Diageo had a strong balance sheet and was watching the bid proceedings very closely.
The high value of Allied’s shares suggested Pernod would have to raise its initial £7.4bn (€11bn) offer, he added.
Rumours about the possible involvement of market leader Diageo in a bid have been rife since Pernod sparked the battle for Allied in April.
A company spokeswoman declined to comment on which brands Diageo might be interested in picking off, but Diageo is thought to be keen on brands such as Courvoisier cognac.
This is the first time Mr Walsh has spoken publicly on the subject. Up until now, Diageo had said it was watching the bidding process and looking at its options.
Diageo trades in some 180 countries around the world and makes brands including J&B, Jose Cuervo, Captain Morgan, Tanqueray, and Beaulieu Vineyard and Sterling Vineyards wines. It employs 24,000 people globally.
Allied is known for brands such as Beefeater gin, Tia Maria and Courvoisier cognac, as well as Ballantine’s and Teacher’s scotch whisky.
Pernod has forged a transatlantic alliance with US-based Fortune Brands to fund its bid.
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. It has been given a deadline of June 29 to table an official bid or walk away.
