Allied Domecq agrees to $14 bn takeover by Pernod

UK-based drinks company Allied Domecq PLC said on Thursday that it has agreed to a 7.4 billion-pound ($14.2-billion) friendly takeover offer...

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UK-based drinks company Allied Domecq PLC said on Thursday that it has agreed to a 7.4 billion-pound ($14.2-billion) friendly takeover offer from French rival Pernod Ricard SA. Allied also reported its first-half net profit soared by nearly 20 per cent, driven by growth in its core spirits brands and restaurant unit.

Under the takeover deal, Pernod Ricard would sell some Allied Domecq brands, including Maker’s Mark bourbon and Courvoisier cognac, to US-based Fortune Brands Inc for some 2.8 billion pounds ($5.4 billion) to satisfy competition regulators. Pernod, which has brands including Martell cognac and Jacob’s Creek wine, is offering the equivalent of 670 pence ($12.90) per Allied Domecq share. That represents a premium of about 36 per cent on Allied Domecq’s closing price on February 3, the last business day before speculation of a deal arose, Allied Domecq CEO Philip Bowman said.

“Compared with previous transactions within the sector, it represents very good value,” Bowman said in an interview with BBC radio. He said the board was urging shareholders to back the takeover.

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Pernod Ricard’s director general Richard Burrows said the deal represented “a great opportunity to create shareholder value over the long term. “In the very important North American market, the business of Allied Domecq combined with Pernod Ricard will move us significantly up the ranking, which is a need which we have expressed for some time,” Burrows said.

Shares in Allied Domecq, which also makes Ballantine’s whisky and Beefeater gin, rose 3 per cent to 662.5 pence ($12.69) in early trading on the London Stock Exchange. Shortly after announcing the takeover deal, Allied Domecq reported that net profit in the six months ended February 28 rose 19 per cent to 199 million pounds ($381.28 million) from 167 million pounds a year earlier.